Homeowners who are considering short sales got some good news this month, when it was announced that Gov. Jerry Brown signed into law SB 458. When a seller goes through with a short sale, the bank holding the note agrees to allow the home to be sold at market value, even if that amount is less than is owed on the home. Prior to SB 458, the holder of the first mortgage could accept the sale price as payment in full for the loan amount. If, however, there was a second loan on the property, as is often the case, the holder of the second loan could go after the seller for the amount owed on the loan later, and it could be considered debt.
“The signing of this bill is a victory for California homeowners who have been forced to short-sell their home, only to find that the lender will pursue them after the short sale closes and demand an additional payment to subsidize the difference,” says association President Beth L. Peerce.
“SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders—those in first position and in junior positions—will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property,” she adds.
SB 458 contains an urgency clause, making it effective upon signing. According to the Multiple Listing Service, there are currently 40 active short sale listings in West Hollywood, and 49 short sales since the beginning of 2011.
An interesting article ran in the Wall Street Journal last week about For Sale By Owners, and the lessons one home seller learned while trying to sell his own New York apartment. This was no ordinary seller though. The seller of this particular property was Colby Sambrotto, the founder and former CEO of ForSaleByOwner.com, a consumer website that targets homeowners who aim to sell their home on their own without the assistance of a licensed Realtor. I have written on the pros and cons of For Sale By Owners before (check out the archive of my columns).
Sambratto is considered one of the forefathers of the modern, tech-driven For Sale By Owner movement, which became very popular during the crazy salad days of the market in the mid ‘00s. He also presumably became a wealthy man off of the website he created to guide homeowners through the process.
According to the WSJ, Sambratto recently sold his New York apartment for $2.15 million, but only after giving up, following six months of unsuccessful attempts to sell it himself.
He had attempted the FSBO using a combination of online listings and classified ads before turning over the listing of the 2,000-square-foot apartment to a broker at Bond New York in November. Ultimately though, Samratto hired a Realtor, at full six-percent commission.
Eventually, the property went into escrow after an increase—yes, an increase—in price was suggested by the broker he hired. “At first he wouldn’t let me increase the price,” the broker, Jesse Buckler said. “I told him I know what I am doing—the market is picking up.” By May, it went into contract, he said, after attracting multiple offers. It closed recently for $150,000 more than the original asking price.
This story serves to underscore two factors often cited by Realtors when it comes to FSBOs. First, it helps dispel the myth that a seller will pocket greater proceeds selling on their own. Secondly, it is not true that a home can be sold simply by putting it on the internet and into classified ads. Home buyers, while often incorporating internet searches as part of the overall process, largely depend on buyers’ agents to whittle down the available properties and get them into the ones truly worth seeing or that meet their criteria.
If you or anyone you know are planning to buy a home or sell a home, please don’t hesitate to get in touch with me for a consultation. Have a great week!
Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at [email protected] or facebook.com/jeffersonhendrickrealtor.