Bend
Oregon Short Sales
Three years ago we would not
get involved in short sales. They were a can of worms that never
seemed to close. Today it's a different story. Short sales in
Bend seem to be closing much easier. This is mostly due to the
fact that some lenders do not want to foreclose on homes. There
are some really good buys available today through short sales.
If you are looking to sell you
home on a short sale or whether you are looking to buy a short
sale. Call us today. We are you Bend Oregon real estate experts.
Here's a link
to all Bend Oregon short sales currently
for sale. This link is updated daily.
Making an Offer on a Short Sale? What You Need to Know
Are you looking to buy a new home? Are you thinking that now's a
great time to find bargains? Before you make an offer, it pays to
know a little about the seller's situation.
If a home is being sold for below what the
current seller owes on the property—and the seller does not have other funds to make
up the difference at closing—the sale is considered a short
sale. Many more home owners are finding themselves in this situation
due to a number of factors, including job losses, aggressive borrowing
against their home in the days of easy credit, and declining home
values in a slower real estate market.
A short sale is different from a foreclosure, which is when the
seller's lender has taken title of the home and is selling it directly.
Homeowners often try to accomplish a short sale in order to avoid
foreclosure. But a short sale holds many potential pitfalls for buyers.
Know the risks before you pursue a short-sale purchase.
Facing Foreclosure - Stopping
the Foreclosure Crisis Foreclosure Alternative:
The
Short Sale
A short sale is far from hassle-free, but it’s a better alternative
than foreclosure. And now you’ve got a little help from your
friends in D.C. Here are the facts about short sales and how to get
started.
After a short sale, you may qualify for a loan again in two years--quicker
than you could with a foreclosure in your past.
Facing foreclosure and tempted to stay in your
home until the bank pulls it out from under you? Bad idea. Don’t do it. A much
more graceful exit is a short sale, an agreement between you and
your lender to sell your home for less than you owe. Although there’s
no guarantee that your lender will let you avoid foreclosure with
a short sale, new government regulations are aimed at encouraging
lenders to do so.
Short sales get government incentives
Although short sales are not hassle-free, at least you’ve got
the government backing you. The Home Affordable Foreclosure Alternatives
(HAFA) program provides financial incentives for lenders and borrowers
to avoid foreclosure through short sales or deeds in lieu of foreclosures.
Participation in the HAFA program requires
adherence to guidelines—including
a standard process and minimum timeframes—that speed the process,
says Dallas-based REALTOR® Tom Branch, co-author of Avoiding
Foreclosure: The Field Guide to Short Sales. The HAFA program is
for homeowners who can’t keep their homes with the help of
a loan modification.
Advantages of a short sale
You can be a homeowner again more quickly with a short sale in your
past than with a foreclosure. New Fannie Mae guidelines help you
qualify for a new mortgage in as little as two years after a short
sale, as opposed to up to seven years after a foreclosure.
You will have more time to make relocation plans and save money
than with a deed in lieu. A short sale may take four to 12
months. A deed
in lieu of foreclosure arrangement typically requires you vacate
your home within 30 to 60 days of signing, according to real estate
attorney Lance Churchill.
You can receive up to $3,000 from your lender for moving expenses
at the time of closing of a HAFA short sale or a HAFA deed in lieu
of foreclosure. Relocation funds are part of the incentives of
HAFA, but not necessarily for other short sale or deed in lieu
programs
of the lenders.
You can help your community’s home values. Because the lender
often receives a higher amount of the remaining loan balance than
it would from the sale of a home after a foreclosure, short sales
help support home values in the surrounding community.
Disadvantages of a short sale
Your credit score will take a severe hit. But that would happen
anyway with a foreclosure. Fair Isaac, creator of the FICO score,
says foreclosure
and short sales have virtually identical impacts on your credit
score. VantageScore—a company that has created a credit score model
for consumers—says a short sale will lead to only a marginally
lighter hit when compared with foreclosure.
You may owe additional taxes. In the past, if your outstanding
mortgage was $100,000 and your lender accepted a short-sale purchase
offer
of $90,000, you were liable for income tax on the forgiven $10,000,
says Harlan D. Platt, economist and professor of finance at Northeastern
University in Boston. However, the Mortgage Forgiveness Debt Relief
Act of 2007, which runs through 2012, generally allows taxpayers
to exclude income from the discharge of debt on their principal
residence in some circumstances.
Full relief is available only
if the amount
of forgiven debt doesn’t exceed the debt that was used to
acquire, construct, or rehabilitate a principal residence. Consult
a tax professional
and an attorney to minimize or avoid this liability.
In some states, your lender may still be able to come after you
for the difference between the short sale price and the amount
needed
to pay off the mortgage. Your actual agreement with your lender
and state and local laws and regulations spell out the details.
Consult
a tax professional and an attorney to minimize or avoid this liability.
How to proceed with a short sale
Find a qualified REALTOR® experienced in short sales. Short sales
are tough to navigate, and they’re further complicated by your
loan type—FHA vs. Veterans Administration vs. conventional
loans. Real estate agents who specialize in short sales will know
the proper steps and order of the steps involved. They’ll
also be able to navigate the many parties involved in the process
and
over-burdened loss mitigation departments. Look especially for
agents who have Short Sales and Foreclosure Resource (SFR) Certification,
which requires specialized training.
Gather evidence to support your need for a short sale as opposed
to a foreclosure. You’ll need to prove that you have little
or no equity in your home, you’re behind on your payments,
and you’re no longer able to afford your home. You’ll
need to write a hardship letter to the lender describing your circumstances,
such as a divorce, job loss, illness, death, or other event that
has impacted your income.
A short sale can be a time-consuming process, but if you can avoid
foreclosure, it’s worth it in the long run.
You're a good candidate for a short-sale purchase if:
You're very patient. Even after you come to
agreement with the seller to buy a short-sale property, the seller’s
lender (or lenders, if there is more than one mortgage) has to
approve the sale before
you can close. When there is only one mortgage, short-sale experts
say lender approval typically takes about two months. If there is
more than one mortgage with different lenders, it can take four months
or longer for the lenders to approve the sale.
Your financing is in order. Lenders like cash offers.
But even if
you can’t pay all cash for a short-sale property, it’s
important to show you are well qualified and your financing is
set. If you're pre approved, have a large down payment, and can
close at
any time, your offer will be viewed more favorably than that of
a buyer whose financing is less secure.
You don’t have any contingencies.
If you have a home to sell
before you can close on the purchase of the short-sale property—or
you need to be in your new home by a certain time—a short
sale may not be for you. Lenders like no-contingency offers and
flexible
closing terms.
If you're serious about purchasing a short-sale property, it's
important for you to have expert assistance. Here are some people
you want
to work with:
Experienced real estate attorney. Only about two out of five short
sales are approved by lenders. But a good real estate attorney who's
knowledgeable about the short-sale process will increase your chances
getting an approved contract. Also, if you want any provisions or
very specialized language written into the purchase contract, a real
estate attorney is essential throughout the negotiation.
A qualified real estate professional.* You may have a close friend
or relative in real estate, but if that person doesn't
know anything about short sales, working with him or her may hurt
your
chances of a successful closing. Interview a few practitioners
and ask them how many buyers they've represented in a short sale
and,
of those, how many have successfully closed.
A qualified real estate
professional will be able to show you short-sale homes, help
negotiate the purchase when you find the property you want to buy,
and smooth
communications with the lender. (All MLSs permit, and some now
require, special notations to indicate that a listing is a short
sale. There
also are certain phrases you can watch for, such as “lender
approval required.”)
Title officer. It’s a good idea to have a title officer do
an initial title search on a short-sale property to see all the liens
attached to the property. If there are multiple lien holders (e.g.,
second or third mortgage or lines of credit, real estate tax lien,
mechanic’s lien, homeowners association lien, etc.), it's much
tougher to get that short sale contract to the closing table. Any
of the lien holders could put a kink in the process even after you’ve
waited for months for lender approval. If you don’t know
a title officer, your real estate attorney or real estate professional
should be able to recommend a few.
Some of the other risks faced by buyers of short-sale properties
include:
Potential for rejection. Lenders want to minimize
their losses as much as possible. If you make an offer tremendously
lower than the
fair market value of the home, chances are that your offer will be
rejected and you’ll have wasted months. Or the lender could
make a counteroffer, which will lengthen the process.
Bad terms.
Even when a lender approves a short sale, it could
require that the sellers sign a promissory note to repay the deficient
amount
of the loan, which may not be acceptable to some financially desperate
sellers. In that case, the sellers may refuse to go through with
the short sale.
Lenders also can change any of the terms of
the contract that you’ve already negotiated, which may not
be agreeable to you.
No repairs or repair credits. You will most
likely be asked to take the property “as is.” Lenders
are already taking a loss on the property and may not agree to
requests for repair
credits.
The risks of a short sale are considerable. But if you have the
time, patience, and iron will to see it through, a short sale can
be a
win-win for you and the sellers.
Note: This article provides general information
only. Information is not provided as advice for a specific matter.
For advice on a specific matter, consult your attorney
or CPA. If you want to buy or sell a short sale call Jim or Matt
today!
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Short Sales Bend Oregon 
