What is short selling a house? If you’re planning on selling your home in Colorado Springs and think your situation might qualify as a short sale, the selling process might look a bit different for you.

In this post, our team at Your Home Sold Guaranteed Realty - Barb Has the Buyers Team will discuss what short selling a house means. We’ll also cover what rules Colorado has regarding short sales that homeowners should be aware of.

Key Takeaways:

• Short selling a house is a real estate transaction in which the seller owes more on their mortgage than the current market value of the property. 
• In Colorado, short sales are subject to both federal regulations and state-specific laws. While there are no unique rules exclusive to Colorado regarding short sales, you have to follow certain guidelines and procedures outlined by federal agencies.
• Working with a knowledgeable real estate agent experienced in short sales is essential for navigating the complexities of the process and following federal regulations.

What is Short Selling a House? – What to Know in Colorado

Short selling a house is a real estate transaction in which the seller owes more on their mortgage than the current market value of the property. 

In such cases, the seller negotiates with their lender to accept a lower payoff amount than the outstanding mortgage balance. The lender has to agree to a short sale, and they might choose not to accept the lower payoff. If they agree to the short sale, it allows both parties to avoid the lengthy and costly foreclosure process.

Keep in mind that if the lender agrees to the short sale, it will negatively impact the seller’s credit score, though not as badly as a foreclosure.

What Rules Should Colorado Homeowners Know About Short Selling?

In Colorado, short sales are subject to both federal regulations and state-specific laws. While there are no unique rules exclusive to Colorado regarding short sales, you have to follow certain guidelines and procedures outlined by federal agencies such as the Department of Housing and Urban Development and the Federal Housing Administration.

Some common rules regarding short sales are:

• Lender Approval: The lender needs to approve a short sale transaction before it can occur. This is because they are the ones taking a loss on the outstanding mortgage balance. To get lender approval, you must demonstrate financial hardship and provide proof of your inability to continue making mortgage payments.
• Deficiency Judgment Waiver: In Colorado, lenders have the option to pursue a deficiency judgment against you if the proceeds from the short sale proceeds don’t completely satisfy the outstanding mortgage debt. However, it’s possible to negotiate with your lender for a deficiency judgment waiver. This waiver protects you from being held liable for the remaining debt.
• Tax Implications: You should be aware of potential tax consequences associated with short sales. Under federal tax law, forgiven debt resulting from a short sale may be considered taxable income, although certain exemptions and exclusions may apply.

It’s important to remember that market conditions can significantly impact the success of short selling a house. You should consult with a real estate professional to assess current market trends and determine the feasibility of a short sale based on the current market conditions and property values in Colorado Springs

Barb Schlinker Can Help You in a Short Sale

Working with a knowledgeable real estate agent experienced in short sales is essential for navigating the complexities of the process and following federal regulations. An agent can help you understand your options, negotiate with lenders, and ensure compliance with all applicable regulations and requirements.

At Your Home Sold Guaranteed Realty - Barb Has the Buyers Team, Barb Schlinker and our entire team have been in the real estate business for 27 years. We’ve helped many clients sell their houses fast and for top dollar, and we’ve also helped clients considering short selling a house.

To learn more about working with us to sell a house in Colorado Springs or discuss short sales, call 719-301-1802 or fill out the form on this page. Take the first step to sell your house fast today!

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