Short Sale Information for Homeowners
Whether it be the loss of a job or unexpected expenses, everyone must deal with tough financial situations at least once in their lives. An unexpected loss of income can cause issues from canceling a family trip to not being able to pay a mortgage, but what do you do if you can’t pay your mortgage and are in danger of turning your entire finances upside down?
What is Involved in a Short Sale?
A short sale in real estate is when a homeowner sells a home or property for less than is due on the mortgage. For example, a homeowner listing a home for $150,000 when there is more than $200,000 left on their mortgage. The home is sold to a third party and all proceeds from the home sale go directly to the lender. The lender can forgive the difference in price or get a deficiency judgment against the borrower, which we’ll learn more about later.
Why Should You Short Sale?
Why would you list a home for less than its worth? Most homeowners involved in short sales are in financial trouble and cannot pay their mortgage but want to avoid foreclosure. Foreclosure is harmful to both borrowers and lenders and while a short sale still involves paying less than owed, it’s an easier situation to manage than a foreclosure.
Short Sale vs Foreclosure
A short sale involves a homeowner listing a home for less than is owed on it, but a foreclosure is an act of the lender seizing the home. Whereas foreclosures are initiated by the lender only, short sales can be initiated by the lender or borrower.
How to Buy a Short Sale Home in Colorado
Colorado real estate is hot, but there are short sales on the market that potential homebuyers can take advantage of. If you’re interested in purchasing a short sale home your first task is to get connected with a real estate agent to protect you during the buying process. Ideally, you want to hire an agent that has ample experience in short sales and knows the nuances of this unique transaction. Failure to do your homework and hire a proper agent could cost you in time and financial resources.
Does Colorado Allow Deficiency Judgments after Short Sales?
The state of Colorado allows for deficiency judgments for short sales. In the case of deficiency judgments, a court will require the borrower to pay a portion of the entire difference between what’s left on the mortgage and the short sale price, known as the deficiency.
How to Find Short Sales in Colorado
Tatyana Sturm of The Storck Team has been helping Coloradans avoid foreclosure with short sales for years and has their own inventory of short sale homes for potential homeowners looking to save big. You can browse our short sale inventory or contact The Storck Team directly for further inventory or help with your own short sale. Experience is key when considering short sales, so use a veteran like the Storck Team to help you score a once-in-a-lifetime deal or get out of a difficult situation.