Short Sale Basics 

Today's real estate market can be complicated. The declining markets have made it a real challenge to sell your home and the current economic climate can make for a seemingly impossible situation. Most people are only aware of 2 different ways to get out from under your home. If you have equity, then you could do a traditional sale, if not, then foreclosure looms around the corner as a second option.

There's another way to sell your home if you don't have equity. It's called a short sale and can be one of the best ways out of your current situation. Banks approve short sales throughout the U.S., so you could certainly do a Colorado Springs short sale once you learn the basics.

Not Enough Equity in Your Home

With our declining real estate market, most people that purchased a home or refinanced since 2004 do not have enough equity to sell their home. If they're upside down, owing more for their home than it's currently worth, then a traditional sale is out of the question. And even if your home is worth current market value, the transactions themselves can be expensive. That's where a Colorado Springs short sale comes into play.

With a short sale, the bank will let you sell your home for a loss and potentially forgive the difference that you owe. They can reserve the right to ask you to pay back the difference, although it's a point you can often negotiate. It also damages your credit, but not nearly to the extent that a foreclosure would. It's a way of minimizing the damage and moving on from your current situation and most importantly, a short sale gives you back control of your situation.

Acquire a Buyer and Written Contract

Your very first step is to find a buyer for your home. You have to have a written offer to take to the bank. You can do this the traditional route, by hiring a Realtor and putting your home on the Multiple Listing Service. In fact, most banks recommend using a Realtor to make sure the transaction is done correctly. At this point, don't worry about their commission. In this particular case the bank usually pays them at closing.

Send the Contract and Short Sale Package to Your Lender

Once you have an offer, you submit it to the lender along with your short sale package. If you found a good realtor with short sale experience, they should organize your package and submit it to the bank for you. There's a lot that goes into this package, like your financial information, the offer, a title report and an estimated closing statement.

It's a lot to put together, so you may want to start this process early. The bank won't even consider your Colorado Springs short sale until they have a complete package. Usually they'll provide a checklist of everything you need to send them. Once they have the package, they'll assign a loss mitigation specialist to your file.

The Bank Reviews Your File

At this point the bank will review your the offer, you package and the market value of the property. The bank's job is to get the most amount of money they can for the loan. Or rather, to minimize their loss as much as possible. So they'll compare how much they'll get by accepting a short sale by how much they'd get with foreclosure. And foreclosures can be very expensive. The bank will have to hire a lawyer for the 6-12 months it takes to complete foreclosure proceedings, hire a Realtor themselves, clean the property and try to sell a vacant home that hasn't been cared for in months.

Once they've made their analysis, the bank will then either approve the Colorado short sale, make a counter offer or simply reject it altogether. They may counter the buyer or even ask you to bring money to the closing table. If your using a Realtor or Negotiation service, they will handle this for you.When you receive final short sale approval, the bank will set a deadline for closing.

Finalize the Paperwork

Now that you have approval, the closing process is nearly the same as a traditional sale. At this point, you'll sign over the deed to the new buyers as well as any paperwork the bank requires. This will include documents for any mortgages or liens you have on the property and any agreements you made with the bank during negotiation.

Once you have finished closing, you'll have a fresh start on your finances and your life. A Colorado Springs short sale will bring a quicker resolution to your situation and usually on much better financial terms for you.

Get started with your short sale today!

Wanna learn more about short sales?

Checkout the Short Sale Series:

Short Sales in Colorado Springs and El Paso County Part 1 - What is a Short Sale?

Short Sales in Colorado Springs and El Paso County Part 2 - Do You Qualify?

Short Sales in Colorado Springs and El Paso County Part 3 - Pros and Cons

Short Sales in Colorado Springs and El Paso County Part 4 - The Short Sale Process

Contact me if you'd like to learn more about short sales or want to list your home with a Colorado Springs Short Sale Specialist.

Jamie Mades, REALTOR
Keller Williams Clients Choice
Office: (719) 535-0355
Direct: (719) 685-8200

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Jamie specializes in Colorado Springs homes for sale, Short Sales and Colorado Springs PCS Services,

"reinventing real estate

just for you"