Are you candidate for a short sale | Colorado Springs Vintage Homes Blog

Colorado Springs Short Sales

f you are interested in a short sale, It’s important to utilize a Colorado Springs Real Estate Agent that specializes in Pre-foreclosures, Foreclosures, and Short Sales; and has a successful and ethical track record. Call Kathy Torline – Nordstrom, 719-287-1049.

With all this talk about short sales and foreclosures in Colorado Springs there are many consumers as well as REALTORS who are uncertain about what a short sale is. Let’s first start with a simple explanation of a Short Sale and then discuss who is a candidate for a short sale.

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 either unwilling or unable to cover the difference.

Lenders want to lessen their losses. If a short sale will give them less of a financial loss than going through a foreclosure, they will go for the short sale. If there is a second (or third) lien holder on the mortgage, they also enter into the equation. These other lien holders also have to agree to the short sale.

Who is a candidate 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:

There needs to be a hardship
- 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

The financial situation of the homeowner is also a strong consideration by the lender. A homeowner does not have to be broke to get a short sale approved. Although if the seller has some assets, the lender may approve the short sale and require that the homeowner to help contribute to the proceeds. The lender(s) may also issue a deficiency judgement requiring the homeowner to pay back some (or all) of the money owed. Many times this amount can be negotiated.

As an example: If a homeowner has $50,000 in savings, including stocks and bonds, chances are that the lender will question why the homeowner is applying for a short sale if they have money. The bank will not lose any money to sell the home if the homeowner has money in other assets.

I also urge you to seek professional legal and tax advice on the ramifications of a Short Sale.