Facing Foreclosure? A New California Law AB2424 Could Give You More Time to Sell Your Home...

During the years of the Great Recession, the vast majority of my Sacramento area listings between 2007 - 2012 were with home sellers in some sort of distress or default. And, often I would receive panicked calls from homeowners toward the end of the foreclosure process -- days before the foreclosure was to take place -- asking to list and sell their home asap. And that scenario was extremely difficult to work though, because many mortgage companies would not delay a foreclosure to allow the homeowner to sell. I fought tooth and nail -- sometimes with success and we were allowed to delay the foreclosure and given time to list/sell the home, and other times the home was foreclosed out from underneath the homeowner. 

I am sure you can imagine how devastating that would be.

Well -- thanks to a new law passed in 2024, if you are a homeowner who is facing imminent foreclosure of your home, AB2424 may give you some extra time to sell your home before it is foreclosed out from under you. 

I so wish this had been the law back in the day! Better now than never...Here’s what you need to know in simple terms and how the new rules from AB2424 may be able to help you:

First and foremost -- under the new law, homeowners facing foreclosure should be provided 45 days to sell their home. Of course there is a process to follow, and if followed correctly, you should have ample time to sell your home before foreclosure. If you are staring down the barrel of a foreclosure (also known in California as a "Trustee Sale"), and decide to list your home for sale with a licensed real estate agent, you can request a delay in the foreclosure. If you sign a listing agreement with a real estate agent at least 5 business days before the foreclosure sale date, the foreclosure may be postponed for 45 days. This will provide time to market your home, find a buyer, and close the sale...so you may be able to pay off your delinquent mortgage, sell your home, take your net proceeds (or complete a "short sale" if you have no equity), and avoid foreclosure of your home. 

Have an accepted offer on your home? If you find a buyer for your home and sign a purchase agreement (an accepted offer), you can ask for another delay. As long as your real estate agent follows the correct process, submits the signed purchase agreement 5 business days before the new sale date, the foreclosure may be pushed back for yet another 45 days. This means that as long as you’re actively working to sell your home, the AB2424 gives you a couple different opportunities to delay foreclosure and potentially walk away with your home equity as cash in your bank account.

Peeps, this is a huge deal. I can't even tell you how many more homeowners I could have helped to avoid during the recession if this had been the law back then!

If you are a Sacramento homeowner facing foreclosure and want to list your home for sale -- do not hesitate to reach out to me. I welcome your call at 916-342-1372 or email me at erin@erinstumpf.com.

Short sales in Sacramento -- will they amount to a significant part of the market in 2023 and beyond? Your short sale questions answered...

In the last month or so, I have noticed some buzz online about the potential for the return of short sales to our Sacramento real estate market -- ironically I have found myself explaining mostly to other agents more than anyone else exactly what short sales are. Realistically I suppose if someone has been an agent for under a decade they likley will not have much, if any, experience with them. Short sales have not been a significant portion of the Sacramento real estate market in probably 8 or so years -- and candidly doing a quick search in MLS today, short sales barely register a blip on the radar. Though I would expect that as values stagnate or possibly decline further we will see some sellers faced with some difficult choices. 

By my count today, there are 13 active and pending short sale listings in all of Sacramento County (out of 2,450 active and pending listings). That is approximately one half of one percent. So in other words today, 99.5% of listings are not short sales, and 0.5% of listings are short sales. That is a drop in the bucket. Back in the Great Recession, the vast majority of my listings were short sales. And short sales and other types of distressed property listings absolutely DOMINATED the market. Between my own client listings, and the listings of other agents where they contracted with me solely to negotiate the short sale side of the equation -- I closed well over 100 of these highly complex transactions. 

Keep in mind that listing or purchasing a short sale is A LOT different than a traditional resale real estate transaction with a traditional seller who has home equity. I tell my clients to take everything they think they know about buying real estate and throw it out the window. 

So putting my Short Sale Agent hat on, here are the answers to some commonly asked questions:

What is a short sale? A homeowner who needs to sell ultimately owes more on the property than it is currently worth, so they list the house with a real estate agent who then attempts to negotiate a lower payoff with the owner's mortgage company so the owner can sell the house. For example, if the property is worth $500,000, however the owner has a mortgage for $550,000 the owner would not be able to sell the home and pay off the mortgage with the proceeds of the sale. The property would be listed for $500,000, an offer received from a buyer and accepted by the seller SUBJECT TO LENDER APPROVAL, and the agent would negotiate with the mortgage company to accept the net proceeds of that sale at its current market value. An important note -- usually there needs to be a compelling reason to sell or a financial hardship on the seller's end for the mortgage company to entertain allowing a payoff for less than the mortgage amount owed.

Is a short sale quick? How long will I wait for approval? The term "short sale" is often confused with a quick time period and close of escrow. Short sales are not usually quick. While some mortage companies will provide for a pre-approved short sale process, the average waiting period for the seller's mortgage company to approve the short sale is probably 30-60 days once an buyer offer is submitted. Some take less time...some take A LOT more time. The fastest approval I have received on one of my short sale listings was 11 days. The longest was almost 2 years. Once a short sale is approved, then the bank typically allows the buyer somewhere from 21-30 days to close the transaction. There are SO many variables that will dictate the length of time it takes to get approval...like which lender services the mortgage, which entity owns the mortgage, how many loans there are on the house, how knowledgeable the listing agent is, how cooperative the seller is with the process, if the seller is trying to use a government short sale program, etc. There is also no guarantee a mortgage company will approve a short sale at all. So.......fasten your seatbelt.

Does the seller have to be delinquent with mortgage payments to get a short sale approved? No. I have successfully closed several short sales where the seller stayed current with payments.

Who decides what the listing price is? The price listed in MLS may not be the price the seller's mortgage company is willing to accept. Usually the listing agent will set the price based on market value, and in consultation with the seller. Some mortgage companies offer a pre-approval process for short sales but I would guess that very few listing agents and sellers do this in advance of listing the property for sale. The seller's mortgage company will do its own valuation or appraisal (often referred to as a BPO - or Broker Price Opinion) to validate the offered price. The bank may counter your offer. Heck, they may counter a perfectly reasonable market value offer too... in addition to the possibility of countering the price you offer, the lender may counter the terms of your offer. 

Who pays the real estate agent commissions? In a short sale scenario, the lender(s) who agree to forgive debt and allow a short payoff of the loan(s) pay for the real estate agent commissions - generally by absorbing the costs of the commissions out of the proceeds of the sale. As a side note, oftentimes these commissions are re-negotiated by the lender(s) during the process. Note: Real estate commissions are always negotiable and NOT set by law or local custom. 

Who pays title insurance, escrow fees, and transfer tax fees? These are negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). For example, perhaps the buyer and seller agree initially that the seller will pay for 100% of title insurance and escrow fees, 100% of county transfer tax, 50% the city transfer tax. The lender(s) may negotiate that the buyer pay a different split of these fees...however the portion that is paid by "the seller" is absorbed into the overall debt forgiveness and short payoff. Occasionally you will see a lender agree to pay one of these fees, up to and not to exceed a certain amount (for example, they may agree to cover up to $750 of the escrow fee that costs $1200). Generally then, the buyer would cover the unpaid portion of that fee. So basically, again, the lender(s) will absorb many of those types of fees. 

Who pays for a home warranty? This is negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). Generally though, I would prepare any buyer of a Sacramento short sale property to expect to pay for this cost, even if you ask the seller or short sale lender to cover it. In my experience, this is paid by the short sale lender in less than 20% of my approved short sales. 

Who pays for home inspections, certifications, or repairs? These are negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). Most short sale lenders will not agree to cover things like pest or termite inspections, roof inspections, sewer line inspections, or any corresponding repairs or certifications. A lot will depend on the circumstances with the condition of the property, how many loans are involved, the buyers' loan program, if the property is in default, the length of time of negotiation, etc. As a safety net - buyers, do not expect that lenders will grant these requests. Generally short sale properties are sold "as-is" and sellers can not afford to make repairs anyway. 

Will the short sale lender(s) give the buyer credits for closing costs or interest rate buydowns? These are negotiable between buyer and seller when the offer is initially negotiated (before it is submitted to the lenders for approval). I have seen this vary widely from the short sale lender(s) agreeing to pay up to 3% closing costs for the buyer, to the short sale lender(s) rejecting those requests. Again, much will depend on the circumstances surrounding the sale of the property. 

Who pays delinquent property taxes or unpaid utility liens? It depends. Sellers, if you have not been paying your property taxes or county utilities, you really need to let your agent know this ASAP! I work closely with the title company on this to make sure that we know of any lien issues in advance, but because it can take several weeks or months to get approval, new liens may pop up during the lender negotiation process. When I negotiate short sales, one of my worst fears is that after the short sale is approved an unexpected lien will pop up. This has happened to me before, and for lack of a better way of describing it - this sucks! If you can let your agent know in advance that these items are unpaid, it will save lots of headaches all the way around. IF WE KNOW in advance that these liens exist, there is a great chance that the short sale lender will absorb these costs into their overall debt forgiveness and short payoff. IF WE DO NOT KNOW in advance that liens exist, once the short sale is approved - this will halt the transaction until we can find a way to pay these liens. The seller is often financially unable to pay them, the buyer usually does not want to pay, the agents commission has already been reduced, and the short sale lender has already taken a loss on the loan. Sellers - please save everyone a headache and communicate with your agent.

I have IRS and FTB Tax liens, can I do a short sale? Yes. There is a parallel process to get what's known as a "valueless discharge" of liens when doing a short sale. This does not release you from owing IRS or FTB tax debt but it does release the debt from the property so it can be sold. Again, be up-front with your agent if these exist so your agent can initiate the paperwork and process asap.

Can I buy a short sale property from my sibling/parent/cousin/spouse/relative? No. Short sales must be "Arm's Length" transactions and all parties will have to sign an affidavit stating no parties are related.

Are there tax or legal ramifications for sellers who do a short sale? The best answer I can provide here is that you need to speak to a CPA or an attorney. Every seller's circumstance is different. Some may face income tax on forgiven debt while others may not.

Clear as mud, right? My advice to you is to find a competent Sacramento short sale agent to help you navigate the process. I have done A LOT of these transactions and would be happy to answer your questions.

VICTORY! Closed a really complex short sale today!

Today I closed the MOST COMPLICATED short sale I have ever worked on. Which is pretty remarkable considering that during the Great Recession, I closed more short sales than I care to remember and most were pretty difficult transactions. 

For short sale aficionados, this one had a first mortgage, a second mortgage, a PACE/Ygrene lien, about a decade of IRS Federal income tax liens, many years of unpaid utility liens, and a creditor judgment lien. All these liens had to be negotiated and settled/satisfied in order to close. 

I listed this house in November of 2019, and due to all the moving parts, it was really challenging to line up the pieces. The first mortgage company kept pushing the property into an online auction process, which just unnecessarily ate up a bunch of time. The second mortgage was charged off a decade ago and I had to track down what company even owned the debt. New liens popped up mid-transaction. And we went through 4 buyers who got frustrated with the process, did not want to make additional repairs caused by squatters and vandals, or did not want to pay an increased price as required by the lienholders...each time I had to start the negotiation process over. I had foreclosure sale dates postponed probably 8+ times. In fact, another foreclosure sale was looming and scheduled for June 2nd. 

Transactions like this one take SEVERAL HUNDREDS of man-hours. And teamwork. I am so thankful for Tricia Loughran with Chicago Title for helping with some super important pieces of this. 

Short sales are not common in today's market. But what will happen in the future? Please tell me which fancy algorithm can close a complex transaction like this one? Spoiler alert: they can't. 

So with all this, I am drinking a celebratory beer tonight! Cheers!

Erin, where are all the homes that should be for sale in Sacramento?

I was quoted in a Sacramento Bee article last week, that among other things discussed the imbalance of supply of homes for sale and demand to purchase homes. I was quoted in the article saying "At some point there is going to be this backlog of sellers who have forgone selling. We are going to see those people put their houses on the market."

BUT WHEN?

That is a fabulous question. I thought I'd take a minute to describe some of the things I have been hearing from my clients, as well as some of the bottlenecks and challenges sellers have in this environment. At some point the trickle of new listings will be a little more steady, but we have some things to work through in our Sacramento real estate market.

(1) Some sellers still do not feel safe having buyers in their homes. Some homeowners who want to sell have a higher or lower risk tolerance than others. While the COVID19 vaccine has recently become more widely available, it will still be several months before the majority of the population in our region has been fully vaccinated. And cautious sellers who fear catching COVID19 have been staying put. I have conversations with would-be sellers in this category all the time. It does seem like there is a light at the end of the tunnel, but every would-be seller will have a different comfort-level here.

(2) The court systems have been backed up. You may not realize how many transactions are dependent on court orders or other legal processes. For example the probate court system, which governs who will manage the estate of a deceased person, was closed for a few months. There is a tremendous case backlog, and those who will ultimately decide if and when to sell a home that was owned by someone who died are not able to manage the estate affairs without a court order. I have one client who filed for probate back in the summer 2020 who was just recently finally granted authority to handle his father's estate. Courts also often weigh in on the sale of homes in divorce/family law and bankruptcy cases too.

(3) There is an eviction moratorium and various "just cause" ordinances in place preventing landlords from displacing tenants. While I feel for the plight of tenants who face a COVID19-related hardship, there are property owners who would love to sell if they were able to end the tenancy of their current renters. It is often challenging to sell a home with tenants for a variety of reasons. I was contacted by a single-family homeowner last year who had a non-paying tenant, and ultimately they were advised by their attorney that they could not evict the tenants and should not try to sell until the tenants were either paying rent or move out. 

(4) There is a moratorium on foreclosures. While we have been in an increasing price market for a while in Sacramento and distressed property listings (short sales and foreclosures) account for a very small fraction of listings, these listings are not coming on the market as quickly. (4b) Homeowners who are unemployed or under-employed are propped up by federal stimulus, additional pandemic unemployment insurance income, and loan forbearance. At some point, some of these homeowners will sell when the federal assistance expires.

(5) It can be a little more difficult to prepare a home for sale. I have spoken to many contractors are reluctant to work on occupied homes. For those that do, their schedules tend to be booked out for weeks or months. Some organizations have stopped taking certain donated items, so clearing out the house can take longer. Many building materials, supplies, and appliances have become scarce and can be difficult or expensive to obtain. (I personally am still waiting for delivery of a new cooktop I ordered in early March. I will be lucky to have it by the end of May according to the supplier. No it is not stuck on the Ever Given!)

(6) Where will the seller move once they sell? In this low inventory environment for both purchasing AND renting homes, sellers often express concern that if they sell their home they may not be able to purchase or rent something else. Not every seller has an easy move-out plan. I easily have 8 would-be sellers who would list tomorrow if they were confident in finding a replacement property. There are still plenty of ways to work through this, but some of the options can be a little stressful for risk-averse sellers/buyers.

So hopefully this is informative. And as I was quoted in the Sacramento Bee article -- at some point sellers who have not listed their homes WILL sell. I have a queue of many people who very much want to sell. And at some point we will see those homes come to market. There are ways to work within many of these challenges with a little creativity and determination. I am still listing plenty of homes...

The good news is I am seeing a little more inventory as we inch more into the spring. This is the time of year when we normally see more listing inventory...and I can only hope it takes some of the upward pressure off the market for home buyers, as the current trajectory of the market is not sustainable for the long term. but we all know there is less that is the normal we are all used to. 

COVID19 Temporary Mortgage Payment Relief Toolkit

As you may have heard, the federal government has directed Fannie Mae, Freddie Mac, and HUD to provide borrowers experiencing a COVID19-related financial hardship with temporary mortgage payment relief. This is indeed true, however in order to take advantage of any suspension of mortgage payments, homeowners must apply directly with their loan servicers (aka, the mortgage company).

Since we in Sacramento County have been directed to "stay at home" I have had a little extra time on my hands as I avoid meeting with people face-to-face. I wanted to put  that extra time to a productive use.

I have created a detailed DIY Mortgage Relief Toolkit to help my clients through the process of asking for a forbearance or suspension of payments. If you would like a copy for yourself or for anyone you think may need it, please shoot me a quick email to erin@erinstumpf.com or text me your email address at 916-342-1372. I will forward you a copy. It's FREE. And it is my hope this toolkit will aid those seeking mortgage payment relief as we all go through this crazy time together.

Here are some links to federal government directives:

Fannie Mae Assistance Options for Homeowners Impacted by COVID-19

https://www.fanniemae.com/portal/media/corporate-news/2020/covid-homeowner-assistance-options-7000.html

Freddie Mac: COVID-19 Response

http://www.freddiemac.com/about/covid-19.html

HUD/FHA: COVID-19 Q&A

https://www.hud.gov/sites/dfiles/SFH/documents/SFH_COVID_19_QA_03_18_20.pdf

VA: Special Relief for those Potentially Impacted by COVID-19 

https://www.benefits.va.gov/HOMELOANS/documents/circulars/26_20_7.pdf

USDA: Foreclosure and Eviction Relief in Connection with Presidentially Declared COVID-19 National Emergency

https://www.rd.usda.gov/sites/default/files/USDA_RD_SA_Foreclosure_and_Eviction_Relief_COVID19_NationalEmergency.pdf

Consumer Financial Protection Bureau: Protecting your credit during the coronavirus pandemic

https://www.consumerfinance.gov/about-us/blog/protecting-your-credit-during-coronavirus-pandemic/

Find a HUD-approved housing counselor:

https://www.consumerfinance.gov/find-a-housing-counselor/

New Listing - 8500 Kenneth Ridge Court, Fair Oaks, CA 95628

This 4 bedroom, 3 bathroom, 3232sf Fair Oaks home on over a third of an acre is the perfect blank canvas for your renovation and personal touches! You will love the spacious and open layout with an abundance of natural light. Kitchen features granite counters, island, built in refrigerator, and large pantry closet. Separate living and family room areas, formal dining area great for large gatherings. Dual master suites! Primary master suite has a cozy fireplace, ensuite bathroom with tub with separate shower, and a big walk-in closet. Upstairs discover a large secluded bedroom and a fireman's pole connecting the first and second levels - how fun! Backyard is an outdoor oasis with a built-in pool and spa, expansive covered patio with ceiling fans and lighting. RV access and basketball court area. 3-car attached garage. Newer composition roof. Enviable cul-de-sac location near parks, schools, shopping, restaurants, and more! Don't wait! Offered at $569,900, subject to lender approval of short sale. For more photos and information please visit 8500 Kenneth Ridge Court, Fair Oaks, CA 95628.

Quoted in a Sacbee article about the 2019 Sacramento real estate market forecast...

I was quoted in a Sacramento Bee article this weekend - Tony Bizjak interviewed a panel of Sacramento real estate experts including myself, appraiser Ryan Lundquist, and a few others to get our thoughts on the 2018 market and what we foresee for 2019.

I was not surprised to see that our answers were all fairly similar. And none of us predict that our market is in a "bubble" right now. That seems to be a popular question right now after increasing home prices for the last several years, since the bottom of the market in 2011.

I hate being asked the "are we in a bubble" question because I think most people associate the word bubble with what happened in the real estate market back in 2005-2007 when the real estate market literally exploded and the bottom dropped out of home prices. I do not believe we will experience a situation similar to that era anytime soon. The longer answer is a little more complicated. 

I think psychologically, a lot of people see that home values are approaching where they were in 2005 and fear a bubble. While it seems like yesterday, that was over 13 years ago! According to Trendgraphix, Sacramento County's median home price at the peak of the market in August 2005 reached $395,000. December 2018's Sacramento County median home price is $365,000. The reality is that the value of money changes over time, and when adjusted for CPI inflation, Sacramento's median home price would have to be approximately $507,000 today to be equivalent to the 2005 peak. When I earned my masters degree in public policy, the concept of adjusting for inflation and making values equal in today's dollars to be able to compare apples to apples was really beaten into us. I think this idea is absent a lot of analyses that I see.

Part of the run-up in prices from the previous peak was fueled by bad lending products like stated-income (non-qualifying) zero-down, interest only, or negative amortization loans. Those previous buyers hyper-extended themselves and could not actually afford those homes, and when the market declined many had to short sell or were foreclosed. We actually do not have those artificial lending products anymore, and buyers have to qualify for loans. Your average buyer today can not get a loan without verification of income, assets (for a 3-5% downpayment at a minimum), good credit, income and/or employment. Generally with unemployment rates low, interest rates still relatively low (and having dipped a little in the last month), and home prices still relatively affordable for California, I just do not foresee a bubble. And when the market does eventually decline -- because prices can not go up forever, and someday it will -- we will not have the same hyper-extension and level of buyer default that added gas to the fire before.

What I think we do need to be aware of is that incomes have not risen commensurately with sales prices, and we are likely approaching a saturation point where affordability becomes an issue. I believe that this is what will lead to stagnation of home values in Sacramento. But not a bursting bubble. There was an article this week in Comstock's Magazine that is a pretty good read that reviews the history of past real estate cycles. It is interesting to note that in past market cycles, the bottom did not drop out of prices the way it did during the Great Recession. Anyway, I am off to a super busy 2019 and I look forward to a solid year of helping both home buyers and sellers.

New Listing - 137 Mike Gartrell Circle, Sacramento, CA 95835

Spacious single story 3 bedroom, 2 bathroom, 1,733sf home in Regency Park Natomas! You will love the custom interior paint, vaulted ceilings, lots of natural light and open feel, formal dining area, kitchen with stainless appliances, 5-burner gas stove and convection oven. Large master suite with walk-in closet, ensuite bathroom with double sinks, large sliding door leading to the backyard. Close to recreational bike trails, parks, restaurants, retail, freeways, and Sacramento International Airport. Don't wait! Offered at $375,000 subject to lender approval of short sale. For more photos and a virtual tour visit 137 Mike Gartrell Circle, Sacramento, CA 95835.

How to fill out a Short Sale Addendum

I have a new short sale listing coming on the market in the next few days, and it seems that over the last few years, other agents and buyers have forgotten how to do them. In the time period from 2007 - 2012 or so, it seemed like ALL my listings were short sales. I know them backward and forward, how different types of short sales work, how different mortgage companies and banks process them, and more. Short sales are not a huge part of our Sacramento real estate market anymore...but they are still out there.

So - here is a primer on how to fill out a Short Sale Addendum (C.A.R. Form SSA) and what it means to buyers and sellers.

First, this form must accompany any offer on a short sale listing. This document establishes that the property is being sold subject to the mortgage company's approval of a payoff for less than the amount owed, defines timelines and other parameters in conjunction with the Residential Purchase Agreement. Generally, the SSA discloses that there is no guarantee of approval, that the buyer and seller pay incur costs that are not recoverable in the event the mortgage company(ies) does not approve the transaction, and that the parties may want to obtain tax or legal advice. Aside from that, there are three fillable components that may change the dynamic of the short sale transaction that I want to cover.

Paragraph 1A: SHORT SALE APPROVAL - this timeline indicates the period in which the buyer is willing to wait for the mortgage company to provide written approval for the short sale. This timeline commences upon the seller's acceptance of the offer, and the buyer MUST wait during this timeframe for a response from the mortgage company. In other words -- the buyer CANNOT cancel prior to the timeline in this contract simply because the buyer gets tired of waiting. There may be other contingency timelines that permit cancellation before this period expires, but otherwise the buyer is in contract with the seller and is obligated to wait it out. For a seller of a short sale, you want this timeline to be as long as possible. As a short sale listing agent, I like to see a minimum of 60 days. Ideally the short sale will not take that long for mortgage company approval, however short sale timelines are a bit of a moving target.

Paragraph 2: TIME PERIODS - this indicates when the buyer's contractual contingency timelines will begin. Checking the box for "shall begin as specified in the agreement" is what I prefer as a listing agent. This means that buyer investigation contingencies, appraisal contingencies, loan contingencies, etc. all would begin once the seller accepts the offer (which is BEFORE the short sale mortgage company consents to the short sale). As a short sale listing agent, I want the buyer to conduct inspections, appraisal, loan underwriting, etc. right away. If this box is unchecked, then the buyer's timelines do not start until the mortgage company has issued short sale approval. The sooner the buyer removes contingencies, the better. If timelines do not start upon seller acceptance, then it is possible for the buyer to walk away after we have short sale approval. We do not want to get several months into a short sale and lose the buyer over something relating to condition of the home. If a buyer cancels we want that to happen early so we do not have to take too many steps backward before moving forward again.

Paragraph 3: BUYER'S DEPOSIT CHECK - this indicates when the buyer's initial deposit should be held in escrow. Checking that box for "as specified in the agreement" is what we want to see. This means that within 3 business days of seller acceptance, the buyer's initial deposit is held in escrow (which again is BEFORE the short sale mortgage company consents to the short sale). As a listing agent, I want to see this for a few reasons. One, if the buyer is willing to do this, it indicates they are serious buyers! Two, if the buyer gets sick of waiting and wants to move on, they will want their deposit back. If escrow is not holding a deposit, the buyer can move on and simply never tell us. That would be bad. Three, holding the buyer's deposit upon seller acceptance looks fantastic to the short sale mortgage company. Four, if the buyer removed contingencies (as we discussed in paragraph 2) and then decide before the timeline in paragraph 1A is over, then the seller may have the right to retain the deposit.

Not all buyers of short sales are willing to do all three of these things I recommend. In non-competitive situations, many buyers will not agree to do all of these things...in multiple-offer situations, often buyers will agree. It is all negotiable. Hope that helps!

New Listing - 1371 Jonas Avenue, Sacramento, CA 95864

Wonderful 4 bedroom, 3 bathroom, 2,476sf home is ready for a new owner. You will love the remodeled kitchen with white cabinets, granite counters and stainless appliances, spacious living room with cozy fireplace, wood flooring. Backyard is an outdoor oasis with built-in swimming pool and park-like 0.5ac lot with lots of sunny space to garden and play! Huge 3-car detached garage and circular driveway offers plenty of accessory space and parking. Located near parks and K-12 schools, short distance to Sacramento State. Offered at $475,000 subject to lender approval of short sale. For more photos please visit 1371 Jonas Avenue, Sacramento, CA 95864.

July 2017 Sacramento County Real Estate Statistics...

This summer has pretty much flown by and candidly, I can't believe that the kids are going back to school this week, and that the 90 degree days are a welcome relief from the scorching hot temperatures we had in July. Pleasantries aside, the Sacramento real estate market, just like the weather, seasonally changes a bit this time of year and 2017 seems to be no exception.

Inventory has increased! Thank goodness, because the market sorely needs it. Though by increased, I mean it went from about 1 month of inventory for sale, to 1.4 months of inventory for sale. 1.4 months of inventory is still super low. It is still a seller's market for homes priced correctly...multiple offers abound. A balanced market where neither buyer nor seller have an advantage is between 4-6 months of inventory for sale.

A seasonal increase in inventory is typical. If you compare this to the market dynamics from July 2016, you will see it looks remarkably similar.  I expect things will be much the same this year.

The July 2017 Sacramento County single family median home price climbed to $355,000...if typical trends for this time of year hold true, the median price should bump along for the rest of the year and not change too dramatically.

The market is still far from our peak median home price, which per Trendgraphix was $395,000 from August 2005. Adjusted for inflation to today's dollars, that median value would have to reach $492,653 (using the US Department of Labor Consumer Price Index Inflation Calculator) to be equivalent to our previous peak.

I see A LOT of demand for purchasing Sacramento homes. My buyer clients face lots of competition from other buyers, and my sellers enjoy the multiple offers. For one, Sacramento rent prices have increased quite a bit, and with that many renters who can afford to buy are looking to purchase to stabilize their monthly housing expense. Additionally, there are many people looking at Sacramento as a less expensive alternative to the bay area where median home prices are more than double and triple those in Sacramento (my most recent closed sale just last week was for a family relocating to Sacramento from Oakland). And then there is the fact that during the decline, fewer homes were built in the greater Sacramento area - so we did not increase the amount of housing stock to keep up with people creating households in the area. We are seeing some new development in Sacramento though not nearly enough.

So with that, the low supply coupled with the high demand and strong underlying economic conditions should keep the Sacramento real estate market on its current trajectory for a while...

Bank of America Short Sale Forms Advisor

While short sales in Sacramento are not nearly as common today as they were a few years ago, there are still some of them out there. And thankfully after nearly a decade, Bank of America has made it easy to determine just which forms are necessary to submit to request a short sale.

In order to obtain a complete checklist of documents necessary for a Bank of America short sale, you will need to know a couple of things:

• What entity owns or insures the loan? It could be Fannie Mae, Freddie Mac, FHA, VA, USDA, or none of the above;
• Is there anyone in the household that pays household expenses who is not a borrower on the loan? That should be easy enough -- a non-borrowing spouse, domestic partner, boyfriend/girlfriend, parent, child, roommate, etc.

Bank of America will require income, expenses, asset and hardship documentation from the borrower(s). This usually involves providing recent bank statements, paystubs, tax returns, etc. and possibly consenting to a credit check. Additionally, they now require similar documentation from any non-borrower who contributes to the household expenses.

The Bank of America forms advisor is here: https://homeloanhelp.bankofamerica.com/en/document-checklist.html 

Officially an Outstanding Life Member of the Sacramento Association of Realtors Masters Club!

This last week I was honored for my high level of productivity as a Sacramento Realtor, and designated as an Outstanding Life Member of the Masters Club. To qualify as a member of the Masters Club, a Realtor must be in approximately the top 8-10% of all Realtors in Sacramento.

The criteria for being an Outstanding Life Member is qualifying for the Masters Club for 10 out of the last 15 years. I am 10-for-10, having qualified for 10 years in a row!

I am definitely among the youngest members of this elite crowd at the age of 38. This was the culmination of a decade of hard work, including time serving on the Masters Club Steering Committee and as its President in 2012! Many thanks to all of my clients who entrusted me with their real estate transactions. I look forward to many more years as a top producing Realtor.

Short sales in Sacramento are descreasing but not extinct...

Earlier this year in February, I posted statistics about the decreasing numbers of short sales in our Sacramento real estate market. The numbers of short sales had lessened significantly since the peak of distressed property sales activity, which came in late 2010/early 2011. Just as an update, here is a current snapshot of the short sale activity as of this last month, October 2016. You can see the downward trend even since my last blog post in February. Short sale activity is now approximately 2/3 of what it was earlier in the year. To see a short sale market snapshot from 2009 - 2016, click here.

My own short sale listing activity reflects the bigger market as well. In the heyday of short sales during the bottom of the Sacramento real estate market, more than 75% of my transactions where short sales. Now, this year, short sales represent less than 10% of my transactions...I am still doing them though. Some sellers in certain circumstances still have the need to do short sales. Short sales are not extinct, and I doubt they ever will be...

New Listing - 2826 Alamitos Way, Sacramento (Arden), CA 95821

Adorable 3 bedroom, 1 bathroom, 1,209sf home in Del Paso Manor / Arden! You will love the tree-lined street, updated kitchen, large living room with huge window overlooking the spacious park-like backyard, wood flooring throughout, central heat and air, and 1-car attached garage. Offered at $245,000 subject to lender approval of short sale. For more photos and detail please visit 2826 Alamitos Way, Sacramento, CA 95821.

Short Sales are still selling in Sacramento, but they are a significantly smaller piece of the puzzle than before...

I met with a new buyer client last week, and during the course of our appointment, she asked me my thoughts about the possibility of  purchasing a short sale home. I explained that short sales, foreclosures, and "distressed properties" generally were far less prevalent in the Sacramento real estate market today than they were a few years ago.

Just the pure ratio of short sales to other types of listings in the market is low, so I suppose statistically buyers these days are less likely to purchase a short sale. Last quarter (November, December, January) there were 381 short sales in Sacramento County out of 5597 total homes for sale. That's less than 7% of all inventory.

This graph above portrays the market for short sale listings only in Sacramento County over the last 6 years. I remember there was a time about 5-6 years ago when ALL of my listings were short sales. All of them. 100% of them. That was a chaotic time in the market. An a chaotic time to be a short sale listing agent. I had many active listings, all of them short sales at varying stages of negotiation, and had to wake at 5am to start calling banks with loss mitigation departments on the east coast to negotiate payoffs. And most of my listings had both a first loan, and a second loan or home equity line of credit (HELOC), not to mention a few that had 3rd loans, or maybe IRS or FTB tax liens. Eh, I've done it all.

In 2015, only 20% of my listings were short sales. That is significantly fewer than 5-6 years ago, though proportionately more than double of the market in general. Considering I cultivated a deep skill set in negotiating short sales, it makes sense that while they are a tiny piece of the overall Sacramento real estate market right now, that I am still closing a fair number of them.

Has Zillow improved in 2015 and gotten more accurate in predicting Sacramento home values? Well, no...

Zillow is a blessing and a curse. I'm sure by now most folks who have contemplated buying or selling a home in Sacramento have heard of this website by now. What is Zillow? Zillow.com is a website that, among other things, provides information about neighborhoods and properties.

Zillow is a neat website. I have an agent profile on Zillow. I have clients who have found me or found my listings using Zillow. However, my general thought about Zillow is that while it's a fun consumer tool that provides property information to people looking to buy or sell (or even rent property now), the vast majority of the time, the "Zestimate" (aka, the automated estimate of value that the website dreams up for a property), is usually not close to the market value of a Sacramento area property, and the homes listed for sale on the website are not always current. I usually look at Zillow before I meet with new sellers, because I know they have looked their home's value up there...this helps me know in advance if I will be surprising them with more value, or disappointing them with less value.

As I said, Zillow is a blessing and a curse. It's a blessing because it DOES have some useful information there, cool mapping tools, some property characteristics, etc. It's a curse because most people I talk to think Zillow has current data and that the website knows everything when it comes to local real estate values. Let me tell you -- it does not have current information, and an algorithm does not replace a real estate professional who intimately knows the market. Occasionally it will get reasonably close, but I find more often than not it is WILDLY off. And folks contact me every week asking about properties posted on Zillow that have already sold.

I posted a few times last couple years about how the sales prices of my transactions compare to Zillow data. I've closed 10 transactions in the last couple months so let's take a look to see how close Zillow is to the actual selling prices of these properties.  This information is current as of today, December 27nd, 2015.

10267 Croydon Way, Rancho Cordova, CA 95670; this was a short sale home I listed (represented the seller) in Rancho Cordova. The original listing price was $199,500 (price was pre-approved by the lender Wells Fargo and by Fannie Mae), and this closed on 9/17/15 for $195,000. Zillow's Zestimate: $229,404, approximately 15% above it's selling price. Wow...that's one heck of a difference.

3073 Sand Dollar Way, Sacramento, CA 95821; this was a home I sold (represented the buyer) in the Arden area. The original listing price was $399,950, and this closed on 9/18/15 for $361,000. Zillow's Zestimate: $305,224, approximately 18% below it's selling price. Hmm...we are 2 for 2 with large differences already.

4241 62nd Street, Sacramento, CA 95820; this was a home I listed (represented the seller) in the Tallac Village / Tahoe Park area. The original listing price was $269,900, and this closed on 9/30/15 for $275,000. Zillow's Zestimate: $266,444, approximately 3.2% below it's selling price. Ok that's at least a little bit closer.

7110 Stella Lane #13, Carmichael, CA 95608; this was a condo I sold (represented the buyer) in Carmichael. The original listing price was $117,900, and this closed on 10/5/15 for $118,000. Zillow's Zestimate: $116,555, approximately 1.2% below it's selling price. Ok, reasonably close.

2180 Weller Way, Sacramento, CA 95818; this was a home I sold (represented the buyer) in the Land Park neighborhood. The original listing price was $359,000, and this closed on 11/2/15 for $363,000. Zillow's Zestimate: $371,956, approximately 2.4% above it's selling price.

36 Glenville Circle, Sacramento, CA 95826; this was a home I sold (represented the buyer) in the College Greens neighborhood. The original listing price was $307,000, and this closed on 11/9/15 for $325,000. Zillow's Zestimate: $321,022, approximately 1.3% below it's selling price.

1750 Baines Avenue, Sacramento, CA 95835; this was a home I listed (represented the seller) in the Natomas Park area. The original listing price was $525,000, and this closed on 11/18/15 for $499,000. Zillow's Zestimate: $495,024, approximately 1% below it's selling price.

10 Shearwater Court, Sacramento, CA 95833; this was a short sale home I listed (represented the seller) in the Natomas Shorebird area. The original listing price was $375,000, and this closed on 11/20/15 for $380,000. Zillow's Zestimate: $474,204, approximately 25% above it's selling price. Yikes!

2025 Vallejo Way, Sacramento, CA 95818; this was a home I listed (represented the seller) in the Land Park area. The original listing price was $449,000, and this closed on 12/3/15 for $449,000. Zillow's Zestimate: $469,379, approximately 4.5% below it's selling price.

2025 Bidwell Way, Sacramento, CA 95818; this was a home I sold (represented the buyer) in the Land Park neighborhood. The original listing price was $599,000, and this closed on 12/4/15 for $599,000. Zillow's Zestimate: $560,980, approximately 6.3% below it's selling price.

So as you can see...there are a couple transactions where Zillow gets pretty close, however the vast majority are off thousands of dollars and several percent from the final selling price.

How to apply for a temporary discharge of a federal IRS tax lien so you can close your Sacramento short sale....

While short sales are definitely a much smaller part of the Sacramento real estate market now than they were a few years ago, I am still doing plenty of them. And something that seems to be pretty common, that is seldom discussed, is the fact that many of the folks facing financial hardship also have unpaid income taxes. The IRS may place a Federal Tax Lien on you and your property if you have unpaid income taxes. This can be an issue if you need to sell a home because those liens need to either be paid in full or released before a sale can close. Luckily, there is a process to temporarily discharge tax liens so that a home can be sold.

The IRS wants quite a bit of documentation, packaged up in a certain way, and it can't be submitted until several other milestones in the short sale process have been reached.

I have done this for several of my transactions and it is definitely within my area of expertise. There is not a separate fee for my services to do this, and it is a part of services when I negotiate short sales for my seller clients.

The sellers will need to complete and sign IRS Form 14135 (Application for Certificate of Discharge of Property for Federal Tax Lien), and IRS Form 8821 (Tax Information Authorization) which provides permission for a real estate agent to talk to the IRS on the seller's behalf. Form 14135 outlines in detail the supporting documentation that needs to be sent in with the application. The list of items includes a description of the property, a copy of the deed for the home, a formal appraisal of the home, county valuation of the home, a copy of the formal tax lien as filed with the county, a purchase contract to sell the property, preliminary title report, short sale approvals, an estimated closing statement, and other supporting information as necessary.

An experienced real estate agent will be able to gather all of these documents and assemble the package for submission. If you are selling a home I would not suggest trying to complete this process yourself. It can be complicated. Even just filling out the forms correctly can be a daunting task if you haven't done it before.

When it is time to submit documents to the IRS, you will need to FedEx everything to them at once. For northern California properties, you will need to send everything to the IRS offices in Oakland. In the photo above, all of those documents amounted to about 160 pages, not including the real estate transaction or the short sale negotiation itself. You will need to track the package and find out who the file is ultimately assigned to. Then...follow up! This is not a difficult process but there are several nuances involved. I have closed several of these transactions. If you have questions or are in this situation, I welcome your call.

New Listing - 3539 Land Park Drive, Sacramento, CA 95818

Elegant 3 bedroom, 2 bathroom 2,356 Land Park home! You will love the classic features such as coved ceilings, beatiful wood floors, and arched doorways. Spacious layout with a separate living room and family room, formal dining room, remodeled kitchen with nook, remodeled bathrooms, large bedrooms, lovely brick patio, utility room connects 2-car garage, basement, central heating and air. Don't wait! Offered at $690,000 subject to lender approval of short sale. For more photos and information please visit 3539 Land Park Drive, Sacramento, CA 95818.