Many homeowners can find themselves in a situation where their home is worth less than what they owe on their mortgage. Some would call this being “upside down” or “under water”. This happens to more homeowners than you would expect and many have no clue what their options are. Continue reading to learn more about the Colorado Springs Short Sale process.
Lets assume a seller is has a mortgage of $100,000 having trouble selling because the house is only worth $90,000. A few options the seller can consider are:
- Sell the home for $90,000 and bring more cash at closing to pay the difference of what the house is sold for and what is owed. (If the seller has the money this should be considered as it eliminates the problem property and provide peace of mind knowing the seller is no longer dealing with this stressful property)
- Rent the house and wait until the market improves. (The seller would either need to hire a property manager or manage the rental themselves. There is no guarantee that the tenant will take care of the property so this may lead to more money spent in the long run after paying for repairs.)
- Sell the house with a short sale.
I specialize in short sales and can help many sellers sell their home this way. The short sale process starts with contacting the mortgage company to determine if they will consider a short sale. This is where the mortgage company will allow the home to be sold for less than the seller owes on the mortgage. The seller will typically be taxed on the difference of what the home is sold for and what was owed because this amount is considered a gift. In the example above the seller would be taxed on $10,000 which if they were in an effective tax bracket of 15% would only be $1500.
Another benefit to short sales is that it will avoid foreclosure. Some sellers get behind on payments and really need to sell fast because the bank has threatened foreclosure with a Notice of Election and Demand. This notice basically states that the bank requires the seller to bring there loan current or that they will proceed with Foreclosure.
A short sale impacts your credit much less than a foreclosure would and sellers can sometimes buy a house a couple years after instead of 5-7 years after if they had been foreclosed on.
If you are interested in pursuing a short sale and would like a free consultation please contact me or give me a text or call at 719-235-6797.