Selling a Sacramento Home as a Short Sale After Bankruptcy
There is only one way to sell an underwater home in Sacramento after a bankruptcy has been discharged and finally dismissed, and that method is through a short sale. Doing a short sale after bankruptcy is a greater challenge than doing a short sale before bankruptcy. A short sale after bankruptcy is not a slam dunk, like your lawyer might have promised (lawyers don’t sell homes nor typically negotiate short sales). Sometimes, people think these abandoned homes are great bargains, but generally the banks still insist on receiving market value, and market value is subjective — especially when the home sits in ruins as compared to the surrounding homes and the bank won’t take that condition into consideration when determining value.
See, that’s the thing. People erroneously believe that a bank cares about the condition of a home, and that belief is a foolish assumption. Yes, it makes logical sense that a bank would care, so I understand why you might have formed that assumption because to presume otherwise goes against all that is sane and objective, but let’s remember, we’re talking about our financial banking institutions in the United States. Let’s get real. Banks don’t care.
I closed yesterday another Sacramento home as a short sale after bankruptcy. Bankruptcy does not release the home from the seller’s name. That title and mortgage lien(s) remain. I’m not sure why homeowners sometimes do not understand that they still need to get rid of the house after bankruptcy is over, and that the house is generally not very desirable at that point. Squatters break in. Water leaks develop. Mold can happen. Stuff breaks. And it’s generally been vacant for 6 months to a couple of years, depending on how long the bankruptcy took, and lawyers don’t enjoy a reputation for fast service.
After a home has been discharged in a bankruptcy, the lenders cannot ask a seller for financial records such as bank statements, tax returns and payroll stubs. However, that did not stop Bank of America nor Green Tree from demanding those documents, even after I informed them they are quite possibly breaking federal law. Sometimes, you have to decide on which hill you want to die, and the sellers did not want to die on the paperwork hill, so they submitted the demanded paperwork in protest.
Service Link, representing Bank of America, managed to mangle the HUD 12 ways from Sunday. We submitted various adaptions and argued and argued until Service Link finally accepted the fact that certain customary expenses are seller-paid fees in a short sale transaction. You can’t really blame them because these third-party vendors work on short sales in many other states and customs vary, although it doesn’t explain why they operate unsupervised.
Later, Green Tree came back just prior to closing and insisted that the sellers sign a letter stating they do not have to submit their paperwork because this was a short sale after bankruptcy. Of course, by then it was water under the bridge, and I honestly don’t know how this company stays in business, apart from the Peter Principle that plagues many corporate entities. Oh, wait, I hear Green Tree is under investigation by the FTC.
Fortunately, I managed to sidestep a big fight with Green Tree on the payoff. That’s another thing people don’t understand after a bankruptcy, they think the banks will rollover because the liens are worthless. I’m telling ya the banks won’t. They fully realize the fresh start sellers still require the bank’s cooperation.
Then, several months into the short sale, Bank of America — as has been its policy lately with these underwater mortgages — elected to sell the mortgage to another company, in this case, Bayview. Just as Bank of America was ready to issue the approval, whammo, it forced us to start the process over with Bayview. Did I mention I only get paid once and I get paid the same whether it’s a short sale or a regular equity sale?
Bayview then conducted its own BPO and decided the price needed to be about $25,000 higher, which it may as well have offered to burn down the house, that demand made about as much sense. Part of the “price valuations” is they have often little to do with actual value and are more about how much the bank needs to net. This is akin to a seller telling me she needs to sell at $500,000 because she needs the cash when her home is worth $300,000. Her needs in that case are not relevant and completely unobtainable.
The demand for a higher price from Bayview happened right after thugs broke into the garage, and they also swiped the AC unit, including the lockbox off the front door, along with the front door handle. There was no compensation to the buyer for that, of course, and that was a delicate situation to overcome.
The good news is we closed escrow yesterday, about 6 months after I listed this home. This was actually a fairly fast short sale after a bankruptcy. The types of problems I’ve shared with you concerning bankruptcy and short sales are very common as well. If you need an agent to sell your home after a bankruptcy, you should call your Sacramento short sale agent Elizabeth Weintraub at 916 233 6759. There is no reason to list your home until the bankruptcy has been fully completed. An order to discharge does not count; you need the case closed.