How do you sell your home if you owe more than it is worth in Beaverton, Oregon? Well, there are two ways. The first is to hold on to the property until the market rebounds or you can sell it on a short sale. A short sale, in basic terms, means the bank takes it in the shorts! (It certainly has nothing to do with the amount of time it will take for you to sell your home.) You sell the property and they take the loss,but this usually is only acceptable to the bank if you can prove a hardship. If I were you, and you aren’t in a hardship situation, I suggest you do the first, hold on to the property until the market rebounds.
Here is the reason why. If you can survive this downturn in the market and hold on to your property, you won’t take the hit to your credit that a short sale can cause. (See your CPA for more advice on how it can affect you and your long term financial goals.)
You see, if you sell your home on a short sale, you will not be able to purchase anything for approximately two years, or more, depending on how bad the hit to your credit was with other bills you may have been late on. (But the time is usually about two years.) During those two years, you will usually have to be renting and you will pay more because of the ding on your credit.
If you aren’t behind on your payments yet, but could be because of a job loss, call your lender and try to get a loan modification and get the payments reduced until you can find a new job. But, if you have to move and you have to sell, then I still suggest you call your bank and advise them of what is happening, it will make things a lot easier when it comes to the sale of your home.
Now, if you have to sell and you can prove a hardship, then you are certainly a candidate for a shortsale. (It certainly is better for you than a foreclosure– Once again, you’ll need to talk to your CPA.) Now there are a series of things you are going to need to do to prepare yourself and your home for ashort sale. Unfortunately, it isn’t going to be an easy process, but when it is all said and done, a great burden will be lifted off your shoulders.
One of the first things you are going to need to do is sit down and talk to an agent who is qualified in sellingshort sales. This is a very complex real estate transaction, and if done wrong, it can have significant tax and legal ramifications. A short sale expert will sit down with you, give you a shortsale packet, and go over the entire process from beginning to end. Once again, make sure you call your CPA and lawyer before you ever sign a single document.(A real estate agent is not qualified to give legal or financial advice, so they should have you call your CPA and lawyer first.)
After that has been done, they will have you sign what is called a Letter of Authorization. This letter will spell out what your agent and their representatives can or can’t do on your behalf with your bank. It usually says they can negotiate the sale of your home on your behalf and can have access to all financials pertaining to the sale of your home. But, it does limit what they can do when it comes to a loan modification on your behalf, unless that is something you want done.
The next step is the hard one! You will need to write a hardship letter to your bank explaining why youneed to do a shortsale, why you can’t continue to pay on your current mortgage, and why you need to move on. Then you will need to gather all of your financial information to submit to the bank, including your last two pay stubs, last two months worth of bank statements, tax returns for the past two years, and all your bills (Credit cards, car payments, electric, gas,water…everything). The bank basically needs to know why you are considering a short sale and then the proof that your total income is not enough to pay all your bills. (Especially your mortgage.) They would rather see you stay in the home and pay than take the home back in foreclosure or take a huge loss on a short sale. This is just a warning to you, they maybe calling a lot for more verification on your bills and your income.
The next thing they are going to need from you is the CMA (Comparative Market Analysis) to show the current value of your home. This is where your agent comes in. They will supply you with this. Even after an offer has been submitted on your home, they will still send another agent out to do what is called a BPO (Brokers Price Opinion), and then, if that is satisfactory, and everything else is satisfactory, they will send out an appraiser. (See how long this process is already taking?)
Everything is negotiable with banks, so don’t be afraid to ask for what you think they won’t agree to, they may just surprise you. But, also be prepared for what will feel like a 15 inning baseball game, it won’t be short, and by the time it is over you will breathe a sigh of relief and hopefully be thanking your agent for keeping you sane during the whole process.
Respect Realty LLC (Expect More)
At Respect Realty, LLC our agents believe in 100% dedication to client satisfaction. We specialize in property and land acquisition around the Portland Metro and Vancouver, WA area. We delight in working with first time home buyers and sellers to guide them from start to finish. Our doors are always open and we are always happy to assist you with your real estate questions.
Reach out today, we look forward to talking with you!
Todd Clark and Seraina Aguayo (Owners of Respect Realty)
Respect Realty LLC (Expect More)
Don't forget to follow us on Social Media to keep up with the latest real estate information