COLORADO SPRINGS SHORT SALE INFORMATION

Frequently Asked Questions

It is understandable to have questions when coping with a new and challenging situation, especially when a home is at stake. The reality is that millions of homeowners across the country are finding out that they have more questions than answers. We hope that the following information will help you better understand the circumstances. If you have further questions not addressed below, or would like additional information resources, feel free to Contact .

Do I qualify for a short sale?

The qualifications for a short sale include any or all of the following:

Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
Upside Down – In today's market if you have to sell and are upside down, a short sale may be your only option.
Must move for employment - This is also a good reason to do a Short Sale

What is a short sale?

A Short Sale is the sale of a home when the net sales proceeds does not fully pay off the existing loan or loans and the lender agrees to accept the discounted payoff .

Is a Short Sale for Me?

Lenders are more and more willing to work with homeowners that are facing hardship to accept Short Sales. The lenders prefer to settle the matter with you instead of taking the property through a Foreclosure. While you consider a Short Sale, remember the lender is looking to limit their potential loss on your loan. By completing a Short Sale the lender has also found a better solution for them.

What if I don’t qualify for a mortgage modification, can’t afford my home, and owe more than it’s worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents like me, with the Certified Distressed Property Expert® Designation, have undergone extensive training in how to process and negotiate short sales. A short sale allows you to sell your home for less than what you owe and avoid foreclosure. Speak to your market expert to see if you may qualify.

Why would my lender accept less than what is owed on my mortgage? Lenders are in business to lend money, not to own real estate. They do not want the expense of the foreclosure process and/or the holding and maintaining of the property if it does not sell at foreclosure. The foreclosure process is very expensive and time consuming, so many lenders will agree to what seems a loss on the mortgage when they will actually save money by not completing the foreclosure and holding the property in their portfolio.

How much does a Short Sale cost me? Do you charge?
Nothing. I don’t charge you a cent. The banks pay all the fees at the end of the short sale. For example, All commissions, title fees, and agreed upon closing costs are paid by the lenders.

A Quick Overview of the Short Sale Process in Colorado Springs

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth.

At one time short sales were done infrequently. In recent years they have become more and more a common way for a seller to sell there home. If you have a home that is underwater and you have to move or cant afford it then this is a great option rather than walking away from it or just giving up and letting it go into foreclosure. The process to market the home and get an offer is similar to doing a traditional sale.

Find an agent that knows short sales (ME!)

The agent lists the home for the current fair market value. - It's important to note here that the banks go off of the current value of the home not what it is you owe them.

You gather all the paperwork that the Realtor will need to send to the bank for the short sale department. - This is often the most annoying part for the sellers but can kill a short sale quicker than anything.

If the bank is missing one item it stops the entire process in it's tracks. Items needed may vary but usually consist of 60 days bank statements, 30 days pay stubs, Hardship letter, monthly financials showing what comes in and what goes out. 2 years tax returns.

Once an offer is received the packet is put together by the Realtor and sent in to the bank.

The bank assigns a negotiator that will order a valuation of the home from a third party. It can be just another CMA from a different Realtor or a full blown appraisal. This is the value that the bank will use to determine if the offer is good or not. 30 - 60 days

Once the value is given to the bank the negotiator sends it to the investor that owns the mortgage to see if t meets there criteria. If the Realtor and negotiator are on it then it should be approved or at least receive a counter.

If the offer is accepted then the bank will send an approval letter to the listing agent. This letter will give a close no later than time that everyone needs to meet, usually 30 days. This is also important because the bank many times will put in the approval letter that they are waiving the right to pursue any deficiency. That's a good thing. You have to talk to your CPA about all the tax stuff.

At this point the dates in the contract go into effect such as inspection, loan, and appraisal deadlines. Usually short sales are sold as is. The inspection is for the buyers peace of mind.

On to a successful Closing!!

The times and steps above are not written in stone but are a good example. If your loan is FHA or VA, then the banks will have a slightly different flow. The good thing about those types of short sale's is the VA and FHA tell you upfront they will not pursue a deficiency. The trouble with them is that if the valuation comes in too high (verifiably too high) it can be almost impossible to get up corrected until 6 months go by

Short Sales are a niche in real estate that some Realtor's, like myself do and other Realtor's hate. For this reason I can not stress enough to find a Realtor that does know the intricacies of a short sale.

If you have further questions about the Colorado Springs area or Colorado Springs real estate markets, please don't hesitate to call Chuck Wartman at 719-231-5525 or send an email.

Chuck Wartman (RE/MAX Properties, Inc.): Real Estate Agent in Colorado Springs, CO