Featured
Jerome headshot .png

JEROME GERAGHTY

GLO specializes in Real Estate and Business Law, including Real Estate Transactions, Buying and Selling a Home, Real Estate Investment and Landlord Issues; Business Formation and Development; and Contractor Issues and Mechanics’ Liens

 

Short Sales: Understanding the Process and Risks in Colorado Real Estate

A short sale occurs when a lender agrees to accept less than the outstanding mortgage balance from the property owner. These transactions became more common during economic downturns, particularly when housing prices declined significantly across markets. While both lenders and homeowners face financial losses, short sales are often less costly and damaging than foreclosure.

For lenders, a short sale minimizes losses by avoiding the lengthy and expensive foreclosure process. Homeowners benefit by reducing the impact on their credit compared to foreclosure. Additionally, individuals who complete a short sale may qualify for new loans sooner, helping them recover financially more quickly.

Short sales offer a flexible alternative to foreclosure but require careful management to address their unique responsibilities and risks.

Common Conditions for a Short Sale

To qualify for a short sale, several conditions typically need to be met:

  1. Declined Property Value: The homeowner must demonstrate that the property’s value has decreased compared to similar homes in the market.

  2. Financial Hardship: Evidence of hardship—such as unemployment, divorce, or medical emergencies—must be provided.

  3. Imminent Default: The homeowner must show they are close to defaulting on mortgage payments.

  4. Lack of Assets: Proof that the homeowner lacks substantial assets to cover the mortgage is required.

  5. Qualified Buyer: A buyer willing to purchase the property must be identified.

  6. Lender Approval: The lender must approve the short sale terms, which may include a repayment agreement for any shortfall.

Potential Complications with Short Sales

Short sales can be challenging and often involve a more complex process than a traditional home sale. Some common issues include:

  1. Lengthy Process: Negotiations and approvals can take significantly longer than traditional sales.

  2. Property Inspections: Thorough inspections may uncover costly repair or maintenance issues.

  3. Legal and Tax Implications: Short sales may have unforeseen liabilities, making the advice of an experienced attorney or accountant essential.

  4. Compliance with State Laws: In Colorado, short sales must adhere to the Colorado Foreclosure Protection Act, which protects distressed homeowners from deceptive practices and ensures transparency.

How GLO Can Help

Given the complexity of short sales, partnering with an experienced professional is critical to protecting your interests. At GLO, we provide expert legal support for homeowners and buyers involved in short sales. Our services include:

  • Contract Drafting and Review: Ensuring all agreements comply with Colorado law.

  • Legal and Guidance: Addressing potential liabilities and implications.

  • Risk Mitigation: Navigating challenges to achieve a smooth transaction.

Consulting with experienced attorneys ensures every aspect of the transaction is handled properly. GLO is here to guide you through the complexities of short sales, providing the confidence of knowing your transaction is in expert hands.

Contact GLO today to learn how our expertise can help make your transaction as seamless as possible.

EXPLORE OUR CLIENT REVIEWS

Take a moment to read what out clients have said about their experience working with GLO.

Read more

Featured
Colorado’s Standard Residential Buy Sell Contract Made Easy
Colorado’s Standard Residential Buy Sell Contract Made Easy

Are you buying or selling a home on the Front Range? The Colorado Real Estate Commission requires all real estate brokers use a standard contract for the buying and selling of a home. Thus, you should read this blog to become more familiar with this contract before buying or selling your Colorado home.

Transaction Brokers vs. Buyer or Seller’s Agents
Transaction Brokers vs. Buyer or Seller’s Agents

In Colorado, a real estate agent can have two types of relationships with buyers or sellers. They can either be a transaction broker, or they can be an agent that represents one specific party in a real estate transaction. The two roles have some key differences, and it is important that you, as the buyer or seller, know who you’re dealing with to ensure a smooth transaction. This blog breaks down the key differences and demonstrates why seeking out an attorney may still be in your best interests when buying or selling real estate.

Gift Letters: Using Gifted Money for the Purchase of Your Colorado Home
Gift Letters: Using Gifted Money for the Purchase of Your Colorado Home

Are you looking to purchase a home in Denver, Boulder, Adams or Arapahoe County, or anywhere else along the Front Range? Do you plan to use gifted money for your down payment? If so, ensure that your lender’s underwriter declares you as financially fit using a gift letter.