Thursday, May 1, 2008

Short-Selling the Bend Market

Bratton Day - April 25, the day when appraiser Dana Bratton said the Bend real estate market would start its rebound - has come and

Posted By on Thu, May 1, 2008 at 10:28 AM

Bratton Day - April 25, the day when appraiser Dana Bratton said the Bend real estate market would start its rebound - has come and gone with no discernible sign of an upswing. But The EYE is prepared to be patient. Meanwhile, "short sales" are becoming epidemic around here - not an encouraging development.

A quick search of craigslist for Bend this morning turned up 56 homes advertised as short sales - and, of course, that only counts the ones on craigslist, not those being sold through other channels.

A short sale in real estate isn't the same thing as selling short in the stock market. A short sale on a house simply means you sell it for less money than you owe the bank. Sometimes the bank will agree to a short sale to avoid foreclosing and maybe losing even more money.

A short sale might look like the easy way out for homeowners who are in a deep hole, negative-equity-wise. But there are some serious pitfalls.

The worst is that if you sell short, the IRS treats the difference between what you owe the bank and what you actually repay as income. In other words, if you owe $300,000 on your mortgage, your bank agrees to a short sale and you only pay back $200,000, when tax time rolls around the IRS will say that $100,000 was income and tax you on it - even though you didn't get one cent of actual cash in your hand.

One source who's prominent in the local real estate industry said many short-sellers aren't aware of this trap and will be surprised when they owe a big chunk of taxes next year.

A number of local realtors have jumped on the short-sale bandwagon, even advertising themselves as "short-sale specialists," evidently figuring it's better to get some commission money than nothing. But The EYE's source said the rash of short-selling is helping to keep the local market depressed.

"It hurts the lender, it hurts the seller, and it hurts other people who are trying to sell," the source said. "The only person it helps is the realtor who gets the commission."

This source warned owners who're thinking about a short sale to get some advice from a good accountant first - in the long run they might be better off going through foreclosure, even though that will damage their credit rating.

  • Pin It

Comments (7)

Showing 1-7 of 7

Add a comment

Subscribe to this thread:
Showing 1-7 of 7

Add a comment

More by H. Bruce Miller

  • Who is John Galt? Who Gives a Crap?: Atlas Shrugged's tea party flops hard

    Members of the Ayn Rand cult have waited 54 years for a movie version of her magnum opus, Atlas Shrugged. They finally have one that's true to the letter and spirit of the book. And that's the problem.
    • May 11, 2011
  • LandWatch Goes to the Mattresses Over Resorts

    The fight over Deschutes County's new destination resort rules isn't finished yet: Central Oregon LandWatch has put the county on notice that it plans to challenge them. LandWatch filed ìnotices of intent to appealî Thursday with the state Land Use Board of Appeals, charging that the county's new rules for determining what lands are eligible for resorts ìactually increase the development potential in the county.
    • Aug 23, 2010
  • Waste and Fraud: Walden Goes After the Big Game

    Eastern Oregon's own Rep. Greg Walden and a couple of other Republican congressmen have unleashed their righteous wrath on a federal program that helps low-income folks heat their homes.
    • Jul 2, 2010
  • More »

Latest in The Wandering Eye

  • Moonshine Magic in Bend Still on the Down Low

    Get ready for our great close-up on the home distilling community out next week in our "Best of" issue. We interviewed a mixed bag of legal and anarchist distillers in Bend to find out why distilling is so very, very against the law in one's home.
    • Aug 9, 2012
  • The Eye Wanders Off Into the Sunset

    I’m really sorry to break the bad news to them during this season of peace and goodwill, but after this week the right-wingers in Bend and vicinity won’t have The Wandering Eye to kick around anymore. The decision to stop writing this blog was my own, and it was prompted by several factors.
    • Dec 26, 2010
  • DADT, Gay-Bashing and the "Icky-ness" Factor

    For the past week or so, “Zeo” of the NW Republican blog has had his jock strap in a knot over the prospect of Congress repealing the military’s “Don’t Ask Don’t Tell” rule. To hear Zeo tell it, if DADT is repealed and gays are allowed to serve openly in the US military it will mean the end not only of our armed forces but of America, its economic system and civilization in general.
    • Dec 19, 2010
  • More »

© 2016 LAY IT OUT INC | 704 NW GEORGIA, BEND, OREGON 97703  |   Privacy Policy

Website powered by Foundation