FAQ
Colorado Short Sale General Information
A short sale occurs when a lender agrees to take less than the amount that is owed on a piece of property. If you did not short sale this property, you would likely need to bring a lot of money to the closing table to sell the house. This is not ideal for most people. The benefit of a short sale occurs when your net proceeds from a short sale are insufficient to cover your loan balance in full, but the lender agrees to take a lesser amount. An ideal short sale includes the lender forgiving any remaining loan balance, clearing you from any future contractual obligations to the lender and HOA. Also, this short sale will keep you from loosing the house by way of foreclosure. Colorado Short Sell professionals provide short sale services to any homeowner in the State of Colorado at no cost to you. What do you have to loose?
Short Sale Example
Total Loan Balance: $500,000
Your Home is Worth: $450,000
You are Upside Down: $50,000
Colorado Short Sell professionals negotiate with your lender and successfully short sell your home for $450,000. Your unpaid balance of $50,000 gets forgiven, so your loan balance becomes $0.
We at Colorado Short Sell can identify and implement the best possible Colorado Short Sale solution, which may help you avoid foreclosure. Our short sale services are provided at no cost to you. Once we have reviewed your situation, we will negotiate with your lender to come up with a solution. Our purpose is to secure a fair agreement with your lender. Speak to our Colorado Short Sell team today: 720-897-8690
If you owe more on your mortgage than your home is worth, the debt you owe to the bank may be forgiven through a short sale. Plus you prevent a foreclosure sale on your credit. To obtain a short sale in Colorado, you must use a licensed real estate agent or brokerage. That is what we do. This must be someone who has experience and knowledge in short sale negotiations and licensed in the State of Colorado. The good news is that we have a team of agents and negotiators that are Colorado Short Sell professionals that are licensed and will do this for you at no-cost to you. How is this possible? The lender pays the listing commissions when your property is sold, which includes all Title and Escrow fees. You are generally allowed to stay in your home while the short sale process is occurring and you pay nothing for this service and benefit.
Step 1: Determine if a Short Sale is Right for You.
Give us a call at 720-897-8690 and we can determine if a short sale is your best option. Your other options may include refinance, deed-in-lieu, or bankruptcy protection. If we cannot help you, we have a team of lawyers we can refer you to here in Colorado.
Step 2: Obtain Required and Necessary Documentation
Most lenders require specific documentation for a Colorado Short sale, and they do not all require the same thing or use the same forms. Normally, the first required document is a hardship letter, which is sent to the lender and explains why a borrower can no longer afford their monthly mortgage payments. The documents are gathered and prepared to be sent to the mortgage lender. This step usually takes between 7 and 14 days, but can take longer. We will guide you through the process and provide all the necessary documentation and forms needed.
Step 3: Market the Property
We market the home to potential buyers through various channels, including the Colorado’s Multiple Listings Services (MLS). You are allowed to live in the home during the short sale process. This step usually takes between 10 and 45 days.
Step 4: Negotiation of the Short Sale
Once there is an offer on your property, we submit the offer and paperwork to the lender and negotiate the deal with the buyer. Negotiations can be tedious and take time. It is best practice to continue marketing the home to get backup offers. If the first offer was not high enough, the lender will counter and tell us they need a higher offer. An ideal offer is one that is close to the appraised value of the house less the consideration of any repair work or time involved for the transaction. Your loan balance is normally not that important in a short sale. This step usually takes between 10 and 30 days depending on the lender.
Step 5: Finish the Transaction Once we receive approval from the lender to proceed with the short sale, the next and final step is to finalize the Colorado Title Work and set a closing date for the sale. Traditional closing time is about 30 days after short sale approval from the lender. The total time to process a short sale is normally between 2 and 5 months.
By representing you in the short sale process for your home in Colorado, the lender will pay the listing commissions we earn working to sell your property. This is not paid by you and you owe us nothing other than a big thank you when we get you out of the huge obligation. This includes commission earned by the buyer’s agent. All commissions, title work and closing costs, unpaid taxes, and secondary lien payoffs are negotiated to be paid out of the closing proceeds. Not by you. This means there is no-cost to the homeowners for our Colorado short sale services. We will at no time ask you for money to perform a short sale. Occasionally a seller may have to pay a notary or shipping fee when dealing with certain documents, but these costs are normally under $20 dollars.
In a normal real estate transaction, it is common for the seller to pay for some home repairs after inspections are completed. In a short sale transaction; however, a home is offered as-is and no repairs are to be paid by the seller. Thus, you do not need to put any money toward the property to get out from under it.
Applying for a short sale is easy! The initial process involves some paperwork and forms to be completed. We will send to you to fill out and return. You will be sent a standardized Colorado listing agreement and advisory forms, which are provided by the State of Colorado. Depending on the number of lenders and which lenders you have, you will also receive short sale authorization forms to sign and return. These forms give us permission to speak to your lenders about your mortgage, the payoff balances, begin the short sale negotiation process and allow us to list your property on Colorado Multiple Listing Service or MLS If you are ready to begin short sale qualification, start by applying below.
A short sale is allowed to be performed on all types of properties. From, townhouses, condominiums or retirement communities to farms and single family residences, the main qualification for a short sale is that you owe more on your secured loan than what your property is worth in its current condition. Secondly, you must be suffering some sort of financial, physical or mental hardship. A qualified hardship can include many things, such as:
- Loss of employment or reduced hours
- Impact of COVID
- Major illness or medical expenses
- Divorce
- Increased bills
- Higher living expenses
- Investment Loss
- Changing loan terms or loan payment increase
- Concerning loan terms/High interest rate
- Inability to save for retirement
- Increased anxiety
- Loss of home equity and inability to refinance
What is a hardship letter?
A hardship letter is simply a letter written to the bank explaining why the homeowner would like to pursue a short sale. Our short sale services include helping you prepare and send a hardship letter as part of the Colorado short sale application. We have the experience to know what needs to be done.
But what if I don’t have a hardship?
While some lenders do not require a hardship explanation, other lenders will require at least some explanation of why you cannot pay your mortgage. Our experience is that many banks and lenders have very lenient rules about what they consider to be a hardship. Please give us a call at 720-897-8690 and we can discuss what type of hardship requirements your lender has, and what you can do if you think you do not have a valid hardship. A common misconception about short sales is that you have to be out of money to qualify. This is no true. Having cash savings in the bank, or even situations where you are currently making more money than you have in the past will not necessarily disqualify you from a short sale.
The entire short sale process takes an average of 2 to 5 months depending on the number of loans and property location. Some cases, however, can see the process completed in as little as 45 days. Varying from lender to lender, it can take two weeks or as long as 60 days to receive an approval of a short sale from a lender. Some lenders have their own dedicated offices working on short sale packages while other lenders outsource. The good news is that we have the experience to get this done as quickly as possible. Even with an approval, it may take 2-4 months for the home to be sold. During the short sale process, you are generally allowed to live in the home. Give us a call at 720-897-8690 and we can let you know how long on average your specific lender will take to complete a short sale.
Tactics are being used by unethical and unlicensed short sale agents who are preying on the vulnerabilities of distressed homeowners. Rule of Thumb: You should stay clear from anyone who knocks on the door saying they can help or who is not Colorado licensed and insured. We know what we are doing and do it well while working for you.
The main benefit of a short sale is to easily get out of your mortgage obligation if you are up-side-down on it. The reason can be due to difficulty in making your monthly payments, divorce, death, job loss, or needing to relocate, just to name a few. We have seen virtually every reason why someone needs to short sell in Colorado and our agents have helped many Coloradans in this same situation.
A short sale will help preserve your credit and future income and allow you to buy your next house much quicker than getting foreclosed upon.
There can be many benefits to a short sale, and again there is no cost you to get it done.
Colorado Short Sale General Rules
No. In Colorado, you need a licensed and experienced broker to perform a short sale. You cannot short sale your own property. Even if you could, why would you? Our representation throughput the process does not cost you anything. Leave the logistics to us!
You are allowed to short sale your home even if it requires minor to major repairs. Because a home in a short sale is offered as-is, the buyer is not allowed to ask the homeowner to spend any money on repairs, even after an inspection is completed. Extensive repairs will be reflected in the list price and will be considered by potential buyers. You are not expected or required to put another dime into the home.
Yes, it is possible to short sale a Colorado rental property or non-owner occupied property, which falls into the same category as vacation homes and vacant homes. This is very common with our Colorado Mountain properties. This type of short sale is treated slightly differently than an owner occupied short sale, but the same basic procedures apply. If you currently have tenants, one of the main differences between an owner occupied property and rental property are the rules and notifications you must give to your tenants. We know how to handle this.
Every Colorado short sale situation is unique and complex. Because of this, it is important to talk to a qualified professional to ensure that you are aware and understand possible income tax owed in certain situations and some of the rules involved if you have tenants. We are available to speak with you for free at 720-897-8690.
Yes. Short sales in Colorado with loans acquired through the FHA program are almost identical to short sales performed with traditional lenders. In our experience, the main difference between the two is that the use of an investor to purchase the property is nearly impossible.
For many people who short sold their Colorado homes, qualifying for a home purchase loan is on the top of their list once back on their feet. The minimum time frame after a short sale is usually 2 years. However, if the property was foreclosed upon, you would probably need to wait longer, sometimes upwards of six years. Thus, short selling your house at this time will start the clock ticking for you to be eligible to buy your next property when you are ready.
Yes, you are allowed to short sale your home if you are currently enrolled in a reverse mortgage. In fact, less paperwork is needed to perform the short sale but all of the same benefits apply. One difference between a reverse mortgage short sale and a conventional mortgage short sale is that the lender normally does not require an arm’s length transaction. This means that someone from within the family may be permitted to purchase the home.
Usually. Part of the short sell negotiation process is to work toward forgiveness of the debt of the second mortgage. Even if you have two different lenders, it is oftentimes more beneficial for the second lender to settle with a short sale. If a property goes to foreclosure the second lender normally gets nothing. This is why our negotiation expertise is vital and our experience is unmatched.
Colorado Short Sale Tips
The first thing you should do is not panic. Secondly, call us at 720-897-8690 so we can give you the most up-to-date guidelines for foreclosures and short sales in Colorado. Even if your foreclosure is one week or one day away, it may be possible to delay the foreclosure proceedings. Many people feel that when they receive an NED (Notice of Election & Demand) or after a Colorado State Court foreclosure proceeding all of their options are gone. This is not true, as the lender will try to avoid the more costly foreclosure process. You can avoid the foreclosure process by calling us today!
The Colorado Notice of Election & Demand (NED) is the official legal starting point in the foreclosure process. The lender will issue a NED at some point after a borrower misses their mortgage payments. Every lender and every situation is different, so a borrower might receive a NED at minimum of three months or a up to a few years after missing their mortgage payments. Once you get this, time is of the essence.
In Colorado, all foreclosure sales occur at the county Public Trustee’s office at 10AM in the morning. If you want to buy a foreclosure sale property, you need to bring cash with you to the auction which means the property usually sells for a lot less than market value. Once you are foreclosed on, you are usually sued for the deficiency on the loan. Basically, the amount you owed on the loan minus the recovery of cash at the foreclosure sale. This is all avoided by short selling the property and being proactive to protect your credit and future income.
A second mortgage or home equity line of credit is oftentimes negotiated to be settled during the short sale process, so any debt from these may be generally forgiven per the terms of the negotiation.
Many people who are using inexperienced companies or agents to short sale their home are finding their own short sale experience unsatisfactory for usually a variety of reasons. We receive many calls from people who feel that their current agent is not representing their best interests. There a few reasons why your current agent may not be the best person to short sale your home: but the main reason is inexperience.
A short sale transaction is much more complicated than a traditional home sale. Not only do Colorado real estate agents need to know current short sale laws and bank procedures, they need to have negotiation experience with the major US Banks. Colorado Short Sale Exerts not only has full time and experienced short sale agents, but also experienced short sale negotiators. An inexperienced agent or company will cause delays, which will lead to a higher probability that the current buyer will back out and you have to start from scratch or the bank will deny the short sale. It takes the bank between one week to three weeks to review paperwork, so you must be certain that the correct forms were filled out with the correct information upon submission.
Many homeowners who have low-equity or no-equity in their home are unsure of what options they have. Colorado Short Sell professionals offer help and guidance to homeowners in these scenarios. Being a borderline short sale candidate does not exclude you from the right to sell your home and to be free and clear from mortgage debt. We offer to help homeowners initially try and sell their home as a traditional sale, which means the money earned from the home sale is enough to repay any mortgage(s) and selling expenses.
Homeowners who initially experienced drastic home value loss may now find themselves in a situation where their home values have increased by just enough. Most people do not believe they are allowed to sell their home unless they have a significant amount of equity in their home.
Much of the short sale process is an additional layer of complexity to a traditional real estate transaction. Most Agents do not have this skill set. Because we are experts at short sale transactions, this means we are also experts in traditional real estate transactions as well. If your home value and net sale proceeds fall below the amount of money you owe on your home loan, then a short sale is pursued. Trying to sell your home for a higher price in your market also builds evidence and a case to your lender for approving a short sale. If you are unsure as to whether or not you owe more on your home than it is worth, give us a call at 720-897-8690.
Have you received a letter or phone call from a company claiming they can save your home from foreclosure? Were you told you have to pay a high fee, or pay upfront before any services are done? These are predatory practice signs and you need to learn how to spot them. Avoid any company who guarantees they can stop foreclosure immediately, makes you pay for counseling, or tells you to redirect your mortgage payments. Our short sale services, knowledge and real estate advice are always provided at NO COST to the homeowner.
We understand that many people are discouraged at the thought about moving out of their home. Call us at 720-897-8690 to speak about alternative options that might be beneficial to your situation.
Colorado Short Sale General Credit Information
Because every short sale situation is unique and complicated, there is no single tax answer for an individual who wishes to short sale their home. Current Colorado laws and statutes protect most homeowners from any federal or state taxes when performing a short sale. In some situations such as rental or vacation properties, the money forgiven by a lender may be taxable according to IRS regulations. You will need to consult a tax professional or a tax advisor on any specific questions.
The main advantage of a short sale is not having a foreclosure on your credit report for years. Short sales may still show up on a credit report as a “pre-foreclosure in redemption” status. Although this can result in a credit score reduction of 100 points or less, a foreclosure will usually reduce your score by more than 250 points or more. Plus you will likely get sued by the prior lender after a foreclosure for the principle balance they lost.
We have seen our customers purchase a new home in as little as two years after their previous short sale with very little down. This is why we do what we do.
A common question among homeowners is how a short sale can affect retirement savings. People believe that this is a complicated question, but the simple answer is that when a short sale is completed, the lender is generally not allowed to pursue any monetary actions against the seller for the balance that was owed.
If a foreclosure occurs, then the lender can sue you and garnish all your non exempt wages and levy bank accounts and non exempt assets until they are paid back in full.
This is why you should explore the short sale option before it is too late.
