FAQ Short Sales | Bend OR Real Estate
What is a short sale transaction?
A "short sale" transaction is selling your real estate at a price that is less than what is owed against it. Simply put, you are "selling short" of what you owe.
Who benefits from a short sale?
A short sale can be a win-win situation for the seller, the buyer, and the mortgage holder. The seller who is falling behind on mortgage payments benefits by getting rid of their property prior to foreclosure; the buyer gets a great property at a bargain price; and the bank, who is going to lose money by foreclosing on the home anyway, passes on savings to the buyer while saving more money in legal fees than if they were to foreclose.
How late in the pre-foreclosure process can you start a short sale?
From the point of receiving a "Notice of Default" until the foreclosure date is typically 3-6 months. Your Bend real estate should be listed as soon as possible in order to have time to find a buyer and also to negotiate the short sale with the lender.
What documents are necessary to proceed with a short sale?
Lenders will typically require a hardship letter detailing the circumstances behind the short sale along with financial information such as tax returns, paycheck stubs, bank statements, personal financial statements, monthly budget assessment, etc. The sales documents would include a valid purchase and sales contract, a copy of the listing, a copy of your listing contract, the preliminary HUD-1 settlement statements, which includes a preliminary estimate of proceeds to lender.
Will the seller's credit rating be affected with a short sale?
Although it is up to each lender, a short sale transaction will likely result in a negative impact to your credit report. Again, depending upon the lender, a short sale can show up on your credit report with a reference such as "settled for less than originally owed" or something similar. Although you should consult with your own legal and financial advisor, many consider this better than having a "foreclosure" referenced on their credit report.
Will a lender allow the seller to make a profit on a short sale?
By the nature of the transaction, the seller is not going to make a profit on the short sale. You would be selling a your home "short" of what you owe on it.
Will bankruptcy proceeding affect a short sale?
Most lenders will not proceed with a short sale if you are in bankruptcy proceedings. In fact, Federal Law does prohibits any conveyance of property while in bankruptcy. The bankruptcy court has control over title at that point.
Will the lender require an appraisal on your short sale?
The lender of the seller in a short sale will usually require one or more BPO's, or broker price opinions to determine the current value of your Bend home and may require an appraisal. However, the lender of the buyer will almost always require a standard appraisal as a pre-requisite to issuing a loan on the property.
What are the tax implications of a short sale?
Much like the issue of credit reporting, the circumstances are individual and sellers are encouraged to talk with their accountant and legal advisor concerning tax implications of a short sale. However, in general the Bend real estate short sale represents a loss for the lender, so they will report the amount lost as debt forgiveness to the seller. If a formal tax form 1099 is filed, the seller may be responsible for paying taxes on the amount of this debt forgiveness, although some federal laws and some states have eliminated these taxes on short sales of primary residences. Sellers should consult with attorney and accountant for current law.
Who should contact us?
If you can't afford your mortgage payment any longer on your Bend area real estate, especially if you are significantly upside down on your home's value, and a loan modification doesn't serve you, then it is time to look into a more permanent solution to your problem. But keep in mind that short sale transactions are complicated and demands a real estate agent who is both knowledgeable in Bend real estate short sales as well as having a diligent follow-up system. To get a referral to one of our Premier Bend Oregon real estate brokers, give Lynnea Miller, Designated Principal Broker of Bend Premier Real Estate a call @ 541-323-2779 or fill in the form below (please put "short sale" in the subject line) and a short sale specialist will bet in touch with you.
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