Category Archives: Short Sales

From the inbox: what is a short sale?

Good question!  A short sale is where a seller has listed their home for less than the mortgage value of the property.  For example, say the market value on a home is $150K but the seller owes $170K.  The seller must sale, though.  One option is to list as a short sale, wherein the seller seeks the permission of their lender to sell the home at a loss.  There are some consequences and risks to both sides (on the buyer side, the risk is primarily investment of time).   Always consult a tax or legal professional as needed; this post is not legal advice.

Interested and/or want to know more?  Call Rob at 719-440-6626 or email!

Mortgage Debt Forgiveness Act extended for 2015

If you owe more than your home is worth, there may be more options than you know.  One such option is a short sale, in which the bank agrees to allow you to sell the home for less than the mortgage balance owed.

If the home is your primary residence, you may also be exempt from paying taxes on the forgiven debt.

What does this mean?  If the lender forgives $10K in debt, the IRS may treat this as income, meaning you could owe taxes.  This Act – the Mortgage Debt Forgiveness Act – is meant to exempt you from those taxes (provided you meet the conditions, etc.).

Questions?  If you’re in Colorado, I’d love to help.  If you’re in one of our sister states, let me know and I will connect you with the local agent!

This is not legal advice.  Always consult a CPA, Attorney and local Realtor as needed!

From the inbox: what does it mean to be underwater?

Good question! Short answer: underwater is an industry term meaning you owe more on a home than it will sell for.

Interesting sidenote: I cleaned foreclosures in Las Vegas on the side and saw two homes where the homeowners turned on the water taps and walked away from the home.  In both cases, it was days before someone gained access to the property to shut it off.  They wanted to make the home literally “under water.”

DON’T DO THIS.  If only for the guy that comes in later, please don’t do this.

Longer answer: in an underwater situation, one may feel there is not “out.”  This is not the case; walking away from a home is not the nuclear option people think it is.  In some cases, the bank may be able to pursue you for a deficiency judgement for years afterwards.

The better answer is often a short sale, where you sale the home for less than the amount owed but the lender consents to the sale and forgives the remaining debt.

In other cases, we may be able to work within your existing equity to make a sale happen.

Questions?  Give me a ring at 719-440-6626!

Underwater or in pre-foreclosure on a home? Please read this…

You have options. Don’t “walk away” from a home or let it go to foreclosure. The ramifications of this action can haunt you for years, to include surprises like the people in this article are finding out.

Allowing a home to go into foreclosure does not necessarily absolve you of the debt. The deficiency balance – the difference between the mortgage value and the ultimate sale value of the home – can chase you for years.

This is not legal advice; always consult an attorney or CPA as applicable. However, I can state that you have options in a pre-foreclosure situation.

Call or text me at 719-440-6626 and we can talk about those options.


Short Sale vs. Foreclosure

If you (or someone you know) is underwater on a home, you have options. Please do not “walk away” from a home/mortgage without exploring these options.

What is underwater? This term applies to a home where the mortgage is more than the market value. E.g., you may owe $170K on a home (mortgage value) but only be able to sell for $160K (market value).

In this case, you may be able to do what’s called a short sale, wherein you sell the home for the market value (subject to the approval of the lender).

Why wouldn’t you want to walk away? Foreclosure can leave a collectible debt. In the example above, the bank could pursue you (in some states) for the $10K difference. (In practice, this would be a larger deficiency than $10K with commissions and other costs.)

A short sale by definition (and done correctly) is where the bank agrees to cancel this difference (a debt).

Questions? Need help? Call Rob at 719-440-6626 or email me at!

Deficiency judgments: what are they and how does this impact you?

Short answer: the court says you owe a creditor money.

Longer answer: A deficiency judgment is a court imposed judgment against a person for the difference between the mortgage value and the sale price of a home.

Why does this matter and why is it coming up now?

A lot of folks walked away from homes in the housing bust. This decision is coming around to bite them in a lot of respects as debt collectors and lenders start to make the motions to collect that debt.

Why does this matter to you now? If you’re underwater on a home, please don’t walk away. Give me a chance to help you short sale the home, which does not (done correctly) leave a deficiency.

Looking to buy or sell a home in Colorado Springs? Please call Rob at 719-440-6626!

Short sales, underwater mortgages and promissory notes

Do you owe more than market value on your home? You may have options, one of which is a promissory note.

While not the best option, it may be possible or advisable if the balance is sufficiently low. (E.g., if you are 5,000 underwater, you may want to do a promissory note.) This MAY enable you to satisfy the sale and avoid the credit hit.

Always consult a Realtor, tax or legal professional as applicable!

What is a short sale?

A short sale is a transaction in which the homeowner sells the home for less than the balance of the mortgage.  The main purpose behind the sale is discharge of the remaining balance between sale value and mortgage value.  These sales require approval by the lender but are, in my opinion, worth the effort.

Why shouldn’t you just walk away and allow foreclosure?  First, foreclosure leaves a collectible debt.  The deficiency – the difference between mortgage and sale value – is a collectible debt that can follow you for years.   One of the benefits of a short sale is that the lender will waive the deficiency, discharging it through a 1099-C and stipulating they will not pursue the same.

The second major reason is that a short sale – properly negotiated – can impact your credit less than a foreclosure.  The total impact to my credit in our short sale was approximately 80 points.

Finally, you can qualify for a mortgage sooner with a short sale than with a foreclosure.  For us, it was 23 months from close of short sale to new mortgage.

Questions?  Give me a chance to help! Email me at, or call 719-440-6626!