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Colorado Springs Homes, 4 things to know about a short sale
Short Sales — Part I of Series
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This is the first in a series of blogs about short sales in Colorado; and specifically about hom
es in the Colorado Springs area. As I started to outline what I wanted to write about on Short Sales, I realized this could be a never-ending series; as I already have 9 different topics; and came up with 2 more this morning. This first post starts off with the basics of a short-sale.
Even though our real estate market in Colorado Springs has not been hit as hard as some states like California, Florida, and Arizona; the home values in the Front Range have decreased in the last 18 months. Depending on the area, prices have decreased anywhere from 5% to 20%. (See Recent Blog Posts on Market Conditions: Colorado Springs Homes, August Market Report for Condo/TownHomes and Colorado Springs Homes, August Market Report for Single Family Homes)
Before you start pursuing a short sale on your home in Colorado Springs, here’s a short description and explanation about short sales.
(1) What is a “short sale?”
It is a sale in which the lender authorizes the property to be sold for less than what is owed on it, and it occurs before foreclosure. Essentially the buyer purchases the property for less than the seller’s mortgage and the seller’s closing costs. The seller is unwilling or unable to cover the difference.
(2) Who can qualify for a short sale?
It is completely up to the lender to decide if a seller is eligible to sell their home as a short sale. There are many things that enter into this decision and some of these factors include:
- The borrower’s overall financial condition
- The borrower’s hardship
- The cost to get the property into resale condition
- The property’s value as determined by appraisals or BPO’s (Brokers Price Opinion)
- The cost of marketing and selling the property once it has been foreclosed on
- The mortgage insurance on the property
- The investor on the loan
(3) What is considered a legitimate hardship by the lender?
This varies lender by lender; but as a general rule the borrower must be experiencing one of the following:
- Illness of the borrower or immediate family which has caused severe financial problems
- Death of a spouse, which had caused the inability to make mortgage payments
- Job transfer out of the area without being able to sell the home
- Job loss of borrower with no foreseeable employment due to local economic conditions
- Insolvent borrower
- An adjustable rate mortgage that the borrower can no longer afford the payments
(4) What isn’t considered a legitimate hardship by the lender?
- The borrow doesn’t want the house any more
- The borrower doesn’t feel like making the payments any more
- The borrower wants to buy a bigger home for the same price now.
Some of the subjects on future posts will cover topics such as Resources for Sellers, Alternatives to a Short Sale, Pricing the Property Correctly, What Happens When you get an Offer, Completing the Short Sale Package for the Lender, What is included in The Hardship Letter, Pitfalls and Myths of Short Sales, Tax and Credit Ramifications of Short Sales, What Happens When you Get An Offer from a Buyer on a Short Sale, How to Buy a Short-Sale.
Related Previous Posts:
- Colorado Springs Homes, 4 things to know about a short sale – Part I of Short Sales Series
- Avoid Foreclosure, Know Your Options – Part II of Short Sales Series
- Colorado Springs Home Foreclosures – 11 benefits of a short sale – Part III of Short Sales Series
- The final step in the Colorado Foreclosure process – Part IV of Short Sale Series
- How long does it take to do Colorado Springs Short Sale? – Part V in Short Sale Series
- Are there tax ramifications to a Colorado Springs Short Sale – Part VI
If you enjoyed reading this article, why not 
I’ve been reading along for a while now. I just wanted to drop you a comment to say keep up the good work.
Hey Kathy,
Really enjoyed this post. One of the more informational pieces I’ve seen on short sales.
I’ve personally have a couple friends in the local area that have recently gone through a short sale, or are trying for one.
Justin: Thanks for stopping by the site and for the kind words! The good post must be due to the great coaching I’ve been getting. Thanks!
Tony, Thanks so much for reading and supporting our site. We’ll keep trying to write and give some great knowledge about our hometown.
Kathy,
Good post. I do short sales, also. I can see you know what you are doing. You have also explained the first part very well. Often what I run into is buyer’s agents who will not accept that the bank is not going to heed to their time line. Keep up the good work!
Kathleen:
Thanks for stopping by the blog. I also think a lot of agents don’t understand short sales; both on the buy and sell side. They are complicated transactions; but they are possible.