Last year Central Oregon started seeing a few short sales come on the market. Bend, La Pine, Three Rivers South and just about every other town in Deschutes County saw a decline in the market. Home owners in trouble put their homes on the market and they did not sell. They lowered the price and continued to do so until they were at a price lower than what they owed the bank on the home.
Many of the agents in Central Oregon had no idea what a short sale was or how to successfully market them, not to mention what to do once they had an offer. This year that seems to be changing some. More agents have educated themselves with classes and articles on the web or in print. This has been a learning curve for all of us, the seller, the buyer and the real estate agent.
Buying a short sale is not for everyone it does take patience from the buyer, consistency from the Seller’s agent and open communication from all. The Seller is anxious to get the property sold and often times are behind in their mortgage payments. Every seller that is trying to sell their home in a short sale situation needs to have a REALTOR®. Maureen Francis a REALTOR® in Michigan explained how important it is for a seller to have an agent ;
You need someone experienced in short sales to help you. Chose wisely. The bank is not expecting to deal with you: they are want the package put together by a professional. In order to have any success with the bank, the transaction requires great attention to detail and follow through. Banks notoriously lose short sale packets over and over. Last summer I faxed a short sale packet to a lender at least 12 times. I called to confirm receipt. Each time I called in, nobody knew where it was… That’s just the reality.
As Maureen stated having a REALTOR® if you are the seller is critical – the bank expects to deal with us… and by having a REALTOR® on your side can save a lot of frustration.
Many of the short sales in Central Oregon are in less than perfect condition. This can be detrimental to you the seller. No matter what your price or the circumstances, the fact is there are a lot of properties on the market that you are competing with. Lola Audu says it best;
Just because your home is being sold under less than ideal circumstances does not mean that it should be portrayed this way in your marketing efforts. The goal of a short sale should be to sell your home. Remember that your home will be competing with potentially hundreds or thousands of homes.
You have done your homework, you have an agent and you have a price that puts you to the mercy of the bank. The funniest thing is; Banks usually don’t tell you how much they will accept until after you have an offer. That means we start the process without knowing how it will end. It is important to have a very good grasp of the market. You need an offer to get things really started. Pricing and marketing are key. Buyers can be scared off by short sales because they don’t want to take on the uncertainty. We have to do a good job of demonstrating that we are on top of the process.
A seller of a short sale needs to understand the tax ramification of a short sale. If you are selling a home for less than you owe for it, the bank can in some cases issue a 1099 showing the difference of the sales price to the loan amount as income to the seller. Obviously this could be an issue for some, my friend Maggie Dokic, real estate agent in Florida explains this further;
Well, here’s the good news. For some anyway. If you lived in the home (in other words, it was not an investment property), you may be able to get tax relief from the IRS when faced with a 1099 on a forgiven mortgage debt. Certain criteria must be met, but the relief is there. It’s part of the Mortgage Forgiveness Debt Relief Act of 2007, which was enacted December 20, 2007. This Act was put in place to help people facing mortgage problems in their primary residences. Again, this is not for investment properties. Visit the IRS page to get more details about it.
Now that you feel like you have an idea of why you should use a REALTOR® you should also know that even with the best agent, the most qualified buyer and all your ducks in a row really stupid things can happen. Jay Thompson of AZ tells one such story;
Now I leave this post to you the reader, what have your experiences been, let’s talk about the good, the bad and the ugly side of short sales.