Erin Attardi's Blog

Classy Anatolia home - fabulous Lennar 'Monaco' floorplan located across from future 20+ acre planned park site. 3 bedroom, 2 bathroom, 2,113sf (per assessor) single level open floorplan, den/possible 4th bedroom, separate living and family rooms, big kitchen with cherry cabinets, center island/breakfast bar, upgraded stainless appliances. Large master suite, serene bathroom with separate tub and stall shower. Lots of storage space throughout. 2-car garage. Low maintenance backyard. Located in the Elk Grove Unified School District (yes - even in Rancho Cordova...I did a double-take too), and within close proximity to shopping centers. Subject to lender approval of short sale. For more photos and detail, visit http://www.11751justiniandrive.com/.

GRR. UGH. YIKES.

Before I enter in to what could be perceived by many as a bit of a rant, I want to just state for the record that there is a time and place for the Zillow website and its "Zestimates" of value. If you are a buyer or seller currently using Zillow to gain a perspective the the Sacramento real estate market, attempting to see what homes in your area are selling for, researching the potential value of your home, or something of that nature - good for you and please keep doing so.  That is what the website is intended for - "recreational use."

If you are a loan underwriter using Zillow to second-guess an appraisal by a California State Licensed Appraiser - WHAT ARE YOU DOING???

I got a call on Tuesday from a loan officer I am currently engaged in a transaction with, with good news and bad news. "Erin, great news! I have conditional loan approval on the 35th Street file!" Naturally of course the very first question to roll off my tongue is "That is great Marlena - what is the condition that we must clear?"

Her answer? "Oh, the underwriter wants more recent sales comps for the appraisal...but everything else is good to go."

Hmm...I had received a copy of the appraisal the week prior, and the appraiser cited 5 recent comparable sales within the last 90 days, and made lots of narrative comments regarding the value of the subject property. The majority of the comps were higher in value than the subject property, and higher still with adjustments. Seemed like a really solid appraisal...plus, I felt I negotiated the heck out of this transaction, and both my buyer client and I felt they were getting a great deal on a fantastic East Sacramento property.

Turns out that the loan underwriter (the person responsible for making sure the file is complete, assesses the eligibility of the buyer to receive the loan, etc.) went on to Zillow and found other recent sales and second guessed the appraisal. These other "recent sales" were much older than 90 days, and in neighborhoods that are not apples to apples comparable, or in tear-down condition as compared to the house my clients are buying. The ironic part is that the lower value price range and the "Zestimate" listed by Zillow for this property are both HIGHER than the purchase price?  The "Zestimate" was over $100,000 higher than the purchase price!!!...I guess the underwriter did not scroll down far enough on the page to see that?

Anyway, the appraiser provided more relevant comps, revised the appraisal, and the underwriter cleared that condition and we are now drawing loan documents, and are on track to close on time.

Just keeps getting more interesting...

This Natomas home is a blank canvas awaiting your personal touch! 3 bedrooms, 2 bathrooms, 1,475sf on a corner lot. This property needs a hammer and a paintbrush, but offers a remodeled kitchen with corian counters, cherry cabinets, and tile floors, and an open floorplan. Offered at $179,000 subject to lender approval of short sale. For more photos and detail, visit http://www.2199NewHampshire.com.

So as I mentioned in a previous post, Lyon Real Estate is holding its annual awards ceremony this coming Friday. Today at my weekly office meeting, they gave some "other" awards...these are the inside jokes at the office that definitely will not be recognized at our company awards ceremony. So what award do you think I received? Any bets?

I received the award for "The Longest Escrow" of the year in 2008. This particular transaction was a short sale with Countrywide that took 5.5 months, and LOTS of negotiation (and renegotiation after the approval) on my part.

Har-dee-har guys! The office roared with laughter when this award was presented to me. They all know that short sales are a big chunk of my transactions...not all of them take so long. I just had another one that was approved after only 11 days!  So I will be displaying this certificate proudly!

Did you know that many Fannie Mae Foreclosures qualify for special financing and 6-months of free home warranty coverage through Old Republic Home Protection? There are currently about 250 Fannie Mae owned foreclosure properties in Sacramento that qualify for FNMA's HomePath program. 

Special Financing? You betcha! The Homepath program is available to buyers for the purchase of both a primary residence AND investment property! For the purchase of a primary residence, Homepath Financing allows as little as 3% down (LESS than FHA financing that requires 3.5% down!), and the downpayment can be the buyer's own funds, funds gifted to the buyer, or come from another 3rd party downpayment assistance program. There is no appraisal. There is no mortgage insurance. "High Balance" loans are available.  For the purchase of investment property, Homepath Financing allows as little as 10% down (a far cry from conventional financing 25% down for non-owner occupied loans!). Non-owner occupant borrowers can own up to 10 properties, but have to put 25% down if more than four properties are financed.

Free Home Warranty? Of course! Fannie Mae has partnered with Old Republic Home Protection (my personal favorite in home warranty protection) to offer an outstanding 6-month home warranty plan that is FREE to buyers of Homepath eligible properties. The service contract provides coverage to repair or replace major systems and appliances, including things like heating and air conditioning systems, kitchen appliances, plumbing systems, water heaters, electrical systems, and garage door openers, etc. The coverage even includes pre-existing conditions!  Best of all, because of the special program, FNMA allows the buyer special extended coverage, and $0 service calls!  The program can be extended by the homeowner for a fee after the initial 6-month free period.

So what are you waiting for? FYI only certain local lenders can assist buyers with the program...let me know if I can refer you to one.

If you are in the process of purchasing a home, and you are planning to make a withdrawal from a retirement account (e.g. 401k, IRA, etc.) or an investment account (mutual funds, stocks, bonds, etc) - do yourself a favor and make arrangements to "liquify" these funds well in advance of your close of escrow date. Many people who own these accounts are unaware that it takes a little bit of time to take funds from these accounts.

Case in point...I have a short sale listing that was approved last month, and the short sale lender allowed the buyer 30 days per the terms of the approval to close the escrow. Our close of escrow was supposed to be yesterday.

The buyer for this property obtained a small mortgage loan, and the majority of the the purchase price was coming from a 401k. The buyer signed their loan documents on Monday, and their loan was scheduled to fund on Wednesday - phew!...well ahead of schedule before Friday when we were contractually supposed to close escrow. The problem with this equation? On Tuesday, the buyer contacted the firm that manages their 401k, and requested their downpayment be wired to escrow the next day. UH-OH!

It takes time to liquidate accounts like this! They called after the close of the market on Tuesday (remember, the markets are on Eastern Time), and were informed that once their shares are sold, it takes 3 business days to send the money per some federal regulatory guidelines. THIS IS CREATED HUGE PROBLEM!

The buyer's agent and I had been in frequent contact throughout the approval process and during escrow, and she had assured me that the buyer's loan officer and investment banker were on the same page with the timelines...wrong. She called me in a panic on Tuesday evening with this news. It was after 5pm, so I could not call the short sale lender to let them know we would not be able to close escrow on time until the next morning.

Let's just say I did not sleep well Tuesday night!

Extensions to the close of escrow date on a short sale are NOT ALWAYS granted. Depending on the short sale lender, sometimes you have to start the process over if you can not close within the window of time they specify....and with this specific transaction, there was an impending foreclosure, and the auction date was set for just a few days after our scheduled close of escrow.

I called first thing Wednesday morning and explained the situation to the short sale lender Loss Mitigation specialist...luckily, when they had issued the approval, they had postponed the foreclosure auction date. I had to wait all day for special management approval, but by the close of business on Wednesday, I had a written time extension from the lender! Phew!..it easily could have gone the other way.

So the moral of the story - make sure you have enough time to get your funds. I would suggest that you direct your account holder to make those funds liquid at least 2 weeks prior to your close date...

On February 20th, Lyon Real Estate is having its annual awards ceremony...for some reason this year, the folks at our corporate office decided that the ceremony should have a theme. The theme they chose is "TV Land." Each of our 18 offices was assigned a different TV show, and my Sierra Oaks office was assigned "The Beverly Hillbillies." What!?

Let's just say that this theme was not well-received by many of the other agents in my office. So for our weekly office meeting, which was today, a few fellow Realtors and I decided to dress the part with the hope of inspiring the rest of the office to participate in the theme. We'll see on February 20th if it worked...

Adorable 2 bedroom, 1 bath, 1,170sf East Sacramento River Park home. Light and cheery house with to-die-for wood floors, cozy fireplace, updated kitchen, huge bedrooms, large bathroom has separate tub and shower, newer central heating & ac, attached 1-car garage. Backyard in serene & private setting with lots of fruit trees, water feature and covered patio. Close proximity to Caleb Greenwood Elementary School, Glen Hall Park, CSUS, and all that East Sac has to offer! Offered at $319,000 subject to lender approval of short sale. For more detail and photos visit http://www.5330jeromeway.com/!

Last week I had an experience with an appraisal gone awry. The appraisal value was deemed substantially lower than the contract price for my listing, which obviously threw a wrench into an otherwise smooth transaction. Luckily, I was able to obtain a copy of the appraisal. I found a few errors in the appraisal, made my case, and thankfully it was revised. Phew! Problem solved...for now...

Starting in May, real estate agents and lenders will not be allowed to have any contact with appraisers. Lenders will be ordering their appraisals from large "Appraisal Management Companies" (as opposed to directly from the appraiser himself) that take a cut of the appraisal fee off the top, and farm appraisal orders in mass to registered appraisers. Follow the link to read the new rules imposed by the HVCC (Home Valuation Code of Conduct).

While I do understand the rationale behind this new law, I think it creates a whole new set of problems.

• Instead, appraisal issues like the one I experienced last week will not be resolved. Agents will not receive a copy of the appraisal, nor will agents be allowed to contact the appraiser.
• Appraisers will be forced to try to do the same work for less compensation. An appraisal fee is usually anywhere between $350 - $450...with the management companies taking a bite out of that fee, appraisers will be expected to turn out the same quality of work for less money...either that, or I imagine the cost will be passed along to the consumer, making appraisale more expensive.
• Out-of-town appraisers will be determining values for areas in which they are not familiar. The management companies will be dispatching appraisers from all over northern California to do Sacramento appraisals. Gee - Land Park vs Oak Park...Arden Park vs Arden Manor - they are close enough together, so they must be comparable, right?

Wouldn't a better solution be to crack down on the shady appraisers, lenders, and agents?

Lovingly maintained Stanford Ranch home ready for buyer - NOT an REO or Short Sale! Nestled at the end of a quiet cul-de-sac and adjacent to a wetland, this home has a great floor plan, natural light and lots of new upgrades including a freshly painted interior and exterior, designer light fixtures, new wood laminate flooring, ceramic tile flooring, and carpet, ceiling fans in every room, dual-sided fireplace, and vaulted ceilings. With beautiful landscaping, the private backyard is set for enjoyable BBQs with a large "Evergrain" composite deck, outdoor bar, and built-in benches. As every detail was considered, you'll be ready to call this home upon move-in! The home is 3 bedrooms, 2 bathrooms, 1,238 square feet, .177 acres (per assessor). Certain furnishings and appliances are negotiable in the sale - please contact listing agent for details. Offered at $299,000. For more photos and additional detail, visit http://www.4605StuartPlace.com.

With bank owned and short sale property listings being the rule now, rather than the exception, those listings have quickly become the yardstick by which other non-bank owned and non-short sale properties are measured. Ugh.

Case in point...I have a perfectly gorgeous listing in a foreclosure/short sale-prone area, where no expense was spared with upgrades and attention to detail. I listed the property and within days had multiple showings, and in turn, multiple offers. So, we negotiate and the seller accepts one of the offers, escrow is opened, inspections performed, and things are truckin' right along....until the appraisal. For those of you who don't know, the appraisal is an unbiased estimate of value by a state licensed Appraiser, and is the report what the buyer's lender uses to measure the value of the house for lending purposes.

Literally ALL of the recent comparable sales are inferior properties - unlandscaped, dirty carpet, needs to be repainted, has the standard white tile/oak cabinets...not apples to apples to my listing at all, however, they are the new yardstick for making adjustments up or down to the value of my listing.

So the appraisal came back today $15k under our contract price. Ouch.

Well...the good news is that I just finished pouring through every detail of the appraisal report, and found a few CRITICAL errors. The most notable (and easiest to explain) is that the appraisal report shows my listing as a 4 bedroom home, when it is actually a 5 bedroom home...the outline of the floorplan shows 5 bedrooms (and there ARE 5 bedrooms), but the appraiser made an error when doing the side-by-side analysis. This resulted in a negative adjustment of $5k across the board...so with any luck, we can get the report revised.

Anyway - the moral of the story is just because you have a gorgeous home, your upgrades and improvements do not necessarily translate into big bucks on your appraisal. I wrote a blog post about this a couple weeks ago...

Short sale sellers take note! It is of critical importance to obtain a pest inspection and fill out all of your disclosures in advance of putting your house on the market and entertaining offers from interested buyers.

Sometimes short sale sellers will object to getting a pest inspection in advance because of the $85 - $100 inspection fee, but once I explain the downside of not getting this inspection, they quickly change their minds.

Because short sales are 99% of the time sold "as-is" with no repairs of any kind, it is critically important to provide the buyer with as many disclosures and inspection reports on the front side of the process.

Why? The last thing anyone wants is --AFTER the short sale is approved-- to get a pest inspection and find a termite infestation...or to go through the disclosure process, only to realize that a grandma died in her sleep at the property 2 years ago. These can be deal breakers!

As the seller, you want to make sure that interested buyers know this information in advance. You allow the buyer to make an informed decision regarding the purchase of your property up front. If there is a pest issue, for example, the buyer knows in advance and can decide at that time if it is worth it to them to purchase the property "as-is" and do the repairs on their own at a later time. If a pest issue is discovered after the short sale is approved by the lender, depending on the magnitude of the damage / bid price for repairs, the buyer may decide to walk away from the transaction.

The same applies to disclosures. If there is anything a buyer may deem objectionable (and each buyer has a different definition of what objectionable is), it is best they know this information in advance.

Once a lender approves a short sale, the lender wants that escrow to close...and as the seller, so do you!!