I get asked this question often and it is never a simple answer. Doing a short sale in Portland requires the answer to several questions first. Since this is a huge decision it should never be taken lightly. In my opinion the following are the five most important questions. Get answers to all of them before you do anything. The answers will vary from homeowner to homeowner because of your personal financial situation and the bank that holds your mortgage.
1. Do I qualify for a short sale in the eyes of the bank? I’m going to assume at this point that you owe considerably more than your home is worth. Every bank has their own criteria for approving short sales but there are several common elements. First is the homeowners ability to pay. If you have sufficient income to make your monthly payment (but want to get out), the answer will be no. If you have had a hardship or reduction in income from a job loss or reduced hours that makes it almost impossible to make your monthly payment, the answer is maybe/yes. If you have other assets particularly ‘liquid assets’ (savings, stocks, investment and sometimes even 401k) that could cover the difference between what your home is worth and what you owe, the answer is no. The bank is going to require the equivalent of a fully documented loan application up front to determine your eligibility. This includes but is not limited to tax returns, employment verifications, 3-months of pay stubs, bank statements, investment statements, copies of homeowners insurance and a letter stating your hardship. If you are self-employed be ready for an in-depth review of all your business financials.
Banks are starting to accept short sale requests directly from homeowners in advance of putting the house on the market. However it is far more common for banks and homeowners to wait until they have an offer to officially submit the request to the bank. Your real estate broker (if they know what they are doing) will require you to have all of your documentation together before they list the house. The final answer may not come until the very end of the process which can be frustrating for everyone involved.
2. What are the long term legal and financial ramifications? Early in the decision making process I strongly suggest that you speak to an attorney. I can personally recommend Richard Mario of Buckley LeChevallier (ram@buckley-law.com) who charges $300. to sit down with you and review your specific situation. In some situations (particularly with second mortgages) you will still be responsible for paying back any unforgiven debt. This is why you MUST meet with an attorney first because he may advise another course of action.
It may also be necessary to talk to a CPA. Will a short sale affect your credit rating? YES, and for a few years. I have read a couple of different opinions on the subject but don’t expect to buy another house for at least 2-3 years. If you are able to stay current with all of your other monthly obligations and the mortgage is the only negative credit item on your report, your credit score will recover faster. Will I have to pay income taxes (federal or state) on any of the forgiven debt? Maybe, again that’s why you need good financial advise.
3. Do I need to work with a Real Estate Broker? Yes. Banks will not deal with a For Sale By Owner asking for a short sale approval. To be perfectly honest, this process is long and difficult for those that do it for a living. Most real estate Brokers are not experienced in short sales and will significantly decrease your chances of a positive outcome. Hire only a CDPE (Certified Distressed Property Expert) certified broker or one that can prove a level of success in closing short sale transactions. My husband is a CDPE Broker with Prudential NW Properties (mash@prunw.com) and I am a 20 year veteran Buyers Agent, so I know first hand what it takes to get the job done. Do not hire or agree to pay a third party firm to work with your Broker to ‘negotiate’ with the bank, even if they say the buyer will pay the fee. These companies (many owned by Brokers, sorry to say) are simply looking for more money. Some CDPE Brokers do work with third party companies like Alliance Short Sales that do not charge a fee for their service, but add considerable value. Every bank and the investor behind the bank works in a different way. An experienced Broker will know what route is best for your personal situation. Buyers are very leery of short sales and for good reason, so expect some challenges.
4. How long will it take and where will I live? From beginning to end, many months. I would plan on a month doing your research and meeting with the professionals. Once a property is listed for sale I would expect approximately three months to get an offer. Once the short sale package is submitted to the bank I would expect two months for them to make a decision. Once you receive approval from the bank, closing will take 45-60 days. That’s a total of eight months. Can that go any faster? Yes. If you have all of your paperwork ready at time of listing and update it every month with current pay stubs and bank statements; you hire the right Broker to represent you and you price the house right; you respond quickly (within 48 hours) to every request for documentation from the bank; your home passes the Buyers home inspection without major problems; your Buyer doesn’t have difficulties getting a loan; and lastly a bit of luck. The best I would hope for would be three months if everything went like clockwork.
Where will I live? In the house. There is no reason to move out and incur additional living expenses. Depending on the advise you receive from an attorney it is quite possible that you will not be making any house payments during this time. I would suggest you save what you can and stay current with all of your other financial obligations. Continue to maintain the house and care for it like you always have. It needs to look good in order to attract a buyer. The bank will mostly likely start foreclosure proceedings after you are 90 days late. In Oregon it takes at least another 120 days for the process to complete. The bank may be willing to delay proceedings if you have a short sale offer in process, but there is no guarantee. In any case you will have plenty of notice as to when you will be required to move out.
5. If I don’t qualify for a short sale, do I have other options? Yes. Again an attorney is the best person to answer this question. You always have the option to simply ‘walk away’ from your obligation and allow the bank to foreclose or give them a ‘deed in lieu of foreclosure’ if they will accept one. Bankruptcy is also an option that an attorney may suggest. Lastly, you can choose to stay in your home and continue making the payments (assuming you can of course) until the market recovers and you can sell it for enough money to pay off the loan. Remember you do have to live somewhere and the cost of rental housing is going up every month so look at the long term picture once again. If your mortgage payment is only a few hundred dollars more per month than rent would cost on an equivalent home, you might be better off staying put. Rent is not tax deductible like mortgage interest, so be sure to calculate that in when you are doing your rent/own comparison. Lastly if you can qualify for a refinance into a lower interest rate (4.5% as of Aug. 2010) you may be able to lower your monthly payment making it easier on your budget. However this is close to impossible if you owe more than about 110% of the market value, have any late payments or insufficient income to qualify for the new reduced loan amount.
This is a general outline of most important factors as I see it. I am a 20 year veteran in the Portland Real Estate market and actually care about the people we serve. Each of these subjects go much deeper than I have written about and contain roadblocks and land mines. My hope is to provide a comprehensive overview that contains enough information to get you started in the right direction. I am always happy to answer any questions to the best of my ability. You can email me at jolynne@teleport.com anytime.
Tags: Foreclosures and Short Sales · Mortgage & Finance
As a Buyers’ Agent, I write more Sales Contracts than the average Realtor. That’s because I don’t write any Listing Contracts and 99% of all real estate brokers do, I spend 100% of my time working with buyers. A few years ago when we were at the height of the Sellers market I was writing an average of 2.5 Sales Contracts for every Buyer. Most homes had multiple offers and sold for more than the asking price, so many contracts written were rejected and then we would start the process again. This situation is stressful for my Buyers and no fun for me either. When that era came to an end and real estate returned to normal, Buyers could actually “sleep on it” before making a life altering decision. My Buyers and I could expect that a written Sales Contract would be negotiated to a successful close in most every case.
Then along came short sales. In my 18 years of selling real estate in Portland, I had never written a Short Sale Contract until 2009. I would gladly go back to dealing with multiple offers over short sales. With multiple offers we were dealing directly with the Sellers and we received an answer back within 24 hours, sometimes less. The pain was sharp but it was fast, and if you lost that one you went looking for the next one. Today with short sales, the process involves the bank(s) holding the mortgage(s) that are for more than the selling price. In most cases we are dealing with Banks who often don’t know what they are doing, and take weeks even months to respond. Sometimes they don’t respond at all. There is no end to the process , it just keeps going and going…..
Here are three stories from my recent adventures in Portland Short Sales, each for a different Buyer. The first house we wrote the offer on had an already accepted offer but the Buyer ran into financing difficulties and it sale failed. Our offer was accepted in writing within 48 hours by Citi Bank, who had both the first and second mortgage. A new world record for a bank. Life was good as we moved through inspection and financing and were ready to close with an appointment set with the escrow company to sign in two days. The escrow officer called Citi Bank to confirm the wire transfer instructions and was told that the second mortgage had been sold three days earlier. They were very sorry but could no longer convey clear title so the deal was off. Remember, we had written approval from them, yet there was nothing we could do and they were no help. Due to the heroic efforts of the John L Scott listing agent, a deal was agreed to with the new mortgage holder and the house closed two weeks late. The lesson learned here is that in a short sale in today’s market anything can happen and the banks have no real obligation to do what they say they will do
My second client made an offer on a condo that has both a first and a second with different banks. According to the listing agent the bank is hard at work and we should hear something soon. That was three months ago and we are still waiting. Any bets on this one ending positive?
My third client made an offer on a new construction house that had three other offers. Since my Buyers were very strong and willing to pay more than the asking price we went ahead and submitted an offer. Two days later the listing agent informs me that the home is scheduled for foreclosure in 10 days. Since the second mortgage bank was unwilling to work out a deal, we decided that a foreclosure would be a good thing. You see in a foreclosure, the second mortgage gets wiped out which would leave the first mortgage bank free to accept one of the four offers already written on the property. Or so logic would have it. Apparently the asset manager that handles short sales doesn’t handle REO’s (real estate owned) and therefore has no choice but to move the file on to the REO department. Of course he has no idea who that is or where they might be located, so his advise was to wait until the property was listed again in say three to nine months, since that is how long the bank was taking to get clear title and re-list the property as a bank owned property for sale. Another one bites the dust! We continue to look for another property but this one still haunts my Buyers because it was the one they really wanted. My Buyers and I have decided to avoid the stress and only look at houses that are truly bank owned or Seller owned.
This property did come back on the market just three weeks later as a foreclosure an my buyers made the same offer as before and it was accepted. In a weird way this did work out for everyone.
Webster defines available as: obtainable or accessible and ready for use or service. When you get right down to it, short sales really aren’t available for sale or are they?
Tags: First Time Home Buyers · Foreclosures and Short Sales
The downpayment is usually the biggest obstacle for first time homebuyers. Here are some ideas on how to get started saving.
Seven Tips for Coming Up With a Downpayment
Tags: First Time Home Buyers · Mortgage & Finance
I had the opportunity to show three condos in this building this past Saturday and thought I’d share what I found. Riverscape is currently the last development on the river heading NW along the Willamette River (just past the Fremont bridge). If you take Front street along the riverfront in downtown you will eventually end up there. Saturday was a beautiful sunny day in Portland so the drive along the waterfront was busy with kids playing in the fountains, joggers and families. I passed under the Burnside bridge and noticed that Saturday Market was packed. Riverscape is a mile or so away so there was no real activity when I arrived. There is only one pub on the corner that I could see but the Pearl is only six blocks away and has plenty of shopping and restaurants. This part of the water front has not been fully developed, but the potential is certainly there.
Riverscape has two offerings; the Pacifica Tower which is eight stories high and a very large number of two story townhomes. I was in the tower which is more than half sold. The RE/Max sales office is located in one of the first floor units. I viewed units on floors four thru six. The design is very open in the main living area with floor to ceiling windows on all the exterior walls. All of the units had decks of varying sizes but even the small ones were large enough for a table and chairs to seat four. This is a feature that you won’t find in the Pearl District. The living area had wood floors with the bedrooms being carpeted. While the ceilings were bare concrete, the over all feel was not that of a loft or converted warehouse. The views varied depending on which side of the building you were on. If you had an easterly view, you could almost reach out and touch the river while looking at Mt Hood (very impressive).
When I compare this building to comparable buildings in the Pearl the biggest difference is the amount of square footage you get for the price. Riverscape units are almost 50% bigger. The other difference is Riverscape made a conscious effort to keep the monthly HOA dues low. They vary from $200. to around $500. for the penthouse. The fee includes water, sewer, garbage, cable and all maintenance for common elements inside and out.
Showing properties
1 - 3 of 3.
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Riverscape/ Pacifica community real estate.
(all data current as of
7/30/2010)
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0 beds, 1 full bath
Size: 663 sq ft
Lot size: n/a
Year built: 2008
Parking spots: 1
Walk Score™: 74
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2 beds, 2 full, 1 part baths
Size: 1,478 sq ft
Lot size: n/a
Year built: 2008
Parking spots: 1
Walk Score™: 78
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2 beds, 2 full baths
Size: 1,471 sq ft
Lot size: n/a
Year built: 2008
Parking spots: 2
Walk Score™: 78
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Tags: First Time Home Buyers
This article has 8 tips that a homeowner should follow when trying to work their mortgage lender to obtain a Loan Modification.
Loan Modification Tips
Tags: Foreclosures and Short Sales · Mortgage & Finance
This list of foreclosures in Lake Oswego is updated hourly so check back often. It is sorted by price with the lowest first.
Showing properties
1 - 5 of 23.
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Lake Oswego Foreclosures.
(all data current as of
7/30/2010)
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2 beds, 2 full, 1 part baths
Size: 1,208 sq ft
Lot size: n/a
Year built: 1994
Parking spots: 1
Walk Score™: 49
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3 beds, 2 full, 1 part baths
Size: 1,944 sq ft
Lot size: 6,098 sq ft
Year built: 1986
Parking spots: 2
Walk Score™: 66
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3 beds, 2 full, 1 part baths
Size: 1,852 sq ft
Lot size: 7,840 sq ft
Year built: 1977
Parking spots: 2
Walk Score™: 45
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2 beds, 1 full bath
Size: 780 sq ft
Lot size: 6,969 sq ft
Year built: 1932
Parking spots: n/a
Walk Score™: 51
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2 beds, 2 full baths
Size: 1,400 sq ft
Lot size: n/a
Year built: 1993
Parking spots: 1
Walk Score™: 68
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Tags: First Time Home Buyers · Foreclosures and Short Sales · Neighborhoods
The newest properties will be listed first. This data is real time so check back often.
Showing properties
1 - 25 of 265.
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Portland Foreclosures (newest first).
(all data current as of
7/30/2010)
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2 beds, 1 full bath
Size: 1,355 sq ft
Lot size: 6,534 sq ft
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2 beds, 2 full, 1 part baths
Size: 1,363 sq ft
Lot size: n/a
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3 beds, 2 full baths
Size: 1,520 sq ft
Lot size: 5,227 sq ft
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3 beds, 2 full, 1 part baths
Size: 2,070 sq ft
Lot size: 4,356 sq ft
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2 beds, 1 full, 1 part baths
Size: 1,091 sq ft
Lot size: 1,306 sq ft
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2 beds, 1 full bath
Size: 933 sq ft
Lot size: 4,791 sq ft
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3 beds, 1 full, 1 part baths
Size: 1,296 sq ft
Lot size: 7,405 sq ft
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3 beds, 2 full, 1 part baths
Size: 1,472 sq ft
Lot size: 1,306 sq ft
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1 beds, 1 full bath
Size: 637 sq ft
Lot size: n/a
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4 beds, 1 full, 1 part baths
Size: 2,332 sq ft
Lot size: 8,276 sq ft
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3 beds, 2 full, 1 part baths
Size: 1,504 sq ft
Lot size: 5,227 sq ft
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3 beds, 2 full, 1 part baths
Size: 1,964 sq ft
Lot size: 10,018 sq ft
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3 beds, 1 full bath
Size: 1,134 sq ft
Lot size: 6,098 sq ft
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3 beds, 2 full, 1 part baths
Size: 1,437 sq ft
Lot size: n/a
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5 beds, 1 full bath
Size: 3,141 sq ft
Lot size: 5,227 sq ft
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2 beds, 1 full bath
Size: 895 sq ft
Lot size: 4,791 sq ft
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4 beds, 2 full baths
Size: 1,500 sq ft
Lot size: 6,969 sq ft
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2 beds, 1 full bath
Size: 559 sq ft
Lot size: n/a
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4 beds, 2 full baths
Size: 1,573 sq ft
Lot size: 9,583 sq ft
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3 beds, 2 full baths
Size: 1,124 sq ft
Lot size: 6,969 sq ft
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2 beds, 1 full bath
Size: 1,597 sq ft
Lot size: 2,613 sq ft
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3 beds, 2 full baths
Size: 1,208 sq ft
Lot size: 5,662 sq ft
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2 beds, 1 full bath
Size: 948 sq ft
Lot size: 4,791 sq ft
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2 beds, 1 full bath
Size: 732 sq ft
Lot size: 4,791 sq ft
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2 beds, 1 full, 1 part baths
Size: 1,056 sq ft
Lot size: 4,791 sq ft
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Tags: First Time Home Buyers · Foreclosures and Short Sales
Just $250,000. and not a short sale. I just previewed this home for an out of town client and was blow away. Great condition with a new 90% efficient gas furnace and roof, A/C and interior paint 1955 square feet. I can only hope it is still available when they get here.
We're sorry, but we couldn't find MLS # 10052526 in our database. This property may be a new listing or possibly taken off the market. Please check back again.
Tags: First Time Home Buyers
House flipping by investors is nothing new. On the West Coast it all started in California in the early days of the housing boom. Loans for investors were very easy to get so almost anyone could play the game. Here is how it worked. First an investor would find a home to purchase, preferably one that was not listed with a Realtor. The perfect target was a 1950’s ranch with about 1200 square feet and ugly. Next he would replace the finishes, things like granite counter tops, new tile in the bath, refinish hardwood floors and put tile on kitchen and bathroom floors, paint and spruce up the landscaping. All of this could be done without a permit by just about anyone.
Once the house was all shinny and new (lipstick on a pig and all that) the home would be listed with a local Realtor for $50-$100k more than he paid for it. The market was so hot, buyers would compete for the chance to purchase this ‘remodeled’ home. Often times the winning buyer would have to waive their right to an inspection in order to make their offer more attractive. This was the key for the investor since he did nothing to really improve the mechanical of the house. Buyers were too caught up in the stupid finishes to think about things like the plumbing, electrical and roof.
Today, things have changed dramatically. Loans to investors are no longer easy to get so the old method of house flipping won’t work. But there is something different about today’s real estate market that didn’t exist back then. It’s called short sales and foreclosures. Investors now need to have cash available to purchase distressed properties but the return is just as high.
Here’s how it works. An investor puts in low-ball cash offers on foreclosures (quick turn around) and/or short sales (long turn around) that are in very good condition. In Portland we find that Sellers do not trash the homes prior to moving out so most of them are still very nice. Eventually one of the offers will go to closing. The investor then lists the property for sale with a Realtor at market value and flips it without doing any remodeling. The carrying costs are low because there is no underlining loan and the monthly expense is minimal covering only utilities and lawn maintenance. An smart investor will only make offers on homes that are at least $50-$75K under market value, leaving plenty of room to negotiate. The key here is cash.
Lenders have caught on to this practice so Fannie Mae has added a new restriction to home loans. The rule is that a home must be owned by the same person for 90 days prior to a sales contract being written and accepted. An example would be a home that was purchased by an investor on May 1st could not enter into a sales agreement with a buyer until August 1st. It would then normally take 45-60 days to close on the buyers new loan. The total process could easily take a year but the return on investment is very high and the time invested is very low. Is house flipping right for you?
Tags: First Time Home Buyers · Foreclosures and Short Sales · Interesting Facts & Comments · Mortgage & Finance
The Mississippi Neighborhood of Portland is one of the newer up and coming areas. About 10 years ago the City of Portland tagged it as an area in need of rebirth. Thanks to urban renewal dollars, investors started buying up pieces of land to build a new style of condo that compliments the neighborhood around it. Soon home buyers who couldn’t afford the high prices in NE Portland (during the boom years 2005-2007) settled on the Mississippi area because of it’s close proximity to the City and large inventory of 1920’s bungalows. There are still plenty of ‘fixers’ in the area just waiting for that ambitious buyer. A list of currently available homes is at the bottom of this post. The majority are priced between $250-$300k.
Like any new urban neighborhood it’s the retail core along Mississippi Ave. that really set the
stage for redevelopment. It has be labeled “One of the most vibrant and walkable streets in Portland.” It is also one of the most heavily used cycle corridors into and around the City.
Emanuel Medical Center and Hospital sits and the southern edge of the neighborhood providing not only employment but also a steady stream of customers for the local businesses.
Showing properties
1 - 8 of 8.
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Mississippi community real estate.
(all data current as of
7/30/2010)
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2 beds, 1 full bath
Size: 1,474 sq ft
Lot size: 4,356 sq ft
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3 beds, 2 full baths
Size: 2,064 sq ft
Lot size: 2,613 sq ft
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5 beds, 2 full baths
Size: 3,125 sq ft
Lot size: 4,791 sq ft
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3 beds, 2 full, 1 part baths
Size: 2,484 sq ft
Lot size: 2,178 sq ft
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3 beds, 3 full baths
Size: 1,658 sq ft
Lot size: 2,178 sq ft
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3 beds, 3 full baths
Size: 1,658 sq ft
Lot size: 2,613 sq ft
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3 beds, 3 full, 1 part baths
Size: 2,188 sq ft
Lot size: 2,613 sq ft
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3 beds, 3 full, 1 part baths
Size: 2,609 sq ft
Lot size: 2,613 sq ft
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Tags: Neighborhoods
