The Colorado Springs Real Estate Connection would like to introduce another great article from our friends at Bring the Blog. This article explains exactly what a short sale is.

A “Short Sale” is when a home seller sells his home for a leser amount than what is owed on his mortgage, and the mortgage lender agrees to accept the lesser amount in lieu of a full payoff.

By way of example, a Short Sale may be appropriate for a home seller whose mortgage balance is $250,000 but whose home wouldn’t sell for more than $220,000.  Rather than pay the $30,000 difference to the lender at the time of sale, the seller enters into an agreement with the lender by which all sale proceeds are paid to the bank and the deficient balance is forgiven.

Read Also: Why a Colorado Springs Short Sale is a Great Alternative to Foreclosure

Short Sales are a preferable alternative to foreclosure but the process still harms both parties. For one, the seller is penalized with a derogatory tradeline on credit for not fulfilling a mortgage obligation. And, two, the lender is forced to take a loss on a mortgage loan.  Versus an executed foreclosure, however, Short Sale damages are relatively limited on both sides.

Read Also:  Colorado Springs Foreclosure and Short Sale Information

For this reason, Short Sales are sometimes considered “the economical alternative” to default.

The process of getting a Short Sale approved varies from lender-to-lender and can be time-intensive. Home sellers should not go at it alone — speaking with a real estate agent about the proper protocol is usually the best place to start.  And sellers should be aware of how a Short Sale on their credit can impact future borrowing.

Current Fannie Mae guidelines prevent short-selling homeowners from obtaining new mortgage financing for a period of 2 years.

For more information on buying a Colorado Springs short sale, or if you are facing foreclosure and want to know if you qualify for a short sale, please contact the Wagner iTeam: 719.434.7525

We are  Certified Distressed Property Experts and know what it takes to buy or sell a short sale in Colorado Springs.

The Colorado Springs real estate market saw 1,487 foreclosures in 2009.

Read More: Colorado Springs Foreclosure Report for 2009

Like real estate, it appears that foreclosure activity is a local phenomenon, too.

As reported by RealtyTrac.com, more than half of all foreclosure-related activity in 2009 came from just 4 states:

1. California
2. Florida
3. Arizona
4. Illinois

More than 1.4 million filings made in 2009 are attributed to the above states. Furthermore, each ranks in the Top 10 for 2009 Foreclosures Per Capita.

The other states are Nevada, Utah, Georgia, Idaho, Michigan and Colorado.

Versus 2008, foreclosures are up 21 percent nationwide and that’s a big number, but a deeper look at RealtyTrac’s annual reports reveals a more positive undertone on the housing market.

1. 40 states fell below the national Foreclosures Per Capita average in 2009
2. Foreclosure activity fell on an annual basis in 10 states as compared to 2008

Foreclosures are still prevalent, though, and buying homes in foreclosure continues to be big business.  First-time buyers, move-up buyers, and real estate investors each are bidding aggressively.

Distressed homes account for one-third of home resale activity, according to an industry trade group.

That said, buying foreclosures can be tricky.

First, properties are often sold “as-is” and the cost of repairs may unwind the home’s status as a “value buy”.  Furthermore, a lender may require specific fixes to be made prior to closing and that, too, costs money.

Second, buying a foreclosed home isn’t as streamlined as buying a “normal” home. Closing on a foreclosure can be a 120-day process or longer. A 4-month time-frame may not fit your schedule.

And, third, finding foreclosures can be difficult. Despite the growth in foreclosure search engines, it still takes a good real estate agent to uncover the best homes at the best prices.

Read More: Buying a Colorado Springs Foreclosure or Bank Owned Home

Read the complete foreclosure report and take a peek at RealtyTrac’s foreclosure heat maps.  If you like what you see, talk to your real estate agent about what to do next.

There’s still good deals in the foreclosure market — you just have to know where to find them

Content of this article brought to you by Bring the Blog.

For more information on buying a Colorado Springs foreclosure, please contact the Wagner iTeam for a free, no-obligation home buying consultation: 719.434.7525

Here is the Colorado Springs real estate market foreclosure report for 2009.

Colorado Springs saw 1,487 foreclosure or pre-foreclose homes sell in 2009. Foreclosures made up 24% of all homes sales in Colorado Springs last year.

Here is how the foreclosure sales were represented throughout the city:

Check Out: Colorado Springs Foreclosure and Short Sale Information

How does this break down per area?

Briargate Real Estate Market: 71 foreclosures
12.9% of Briargate home sales were a foreclosure.

Briargate had only 5% of the city’s sold foreclosures. I would attribute this to the general higher price point of the homes in Briargate as well as the fact that most Briargate home buyers have owned a home in the past and had enough mortgage savvy not to get into a “bad loan”. Briargate DID have the least concentration of foreclosures per area.

Central and Downtown Real Estate Markets: 190 foreclosures
32.7% of central and downtown Colorado Springs home sales were a foreclosure.

Central and Downtown Colorado Springs has a lot of smaller homes. Because of this, there are more homes in this area and more opportunities for foreclosure. Additionally, there are a lot of lower priced homes in central Colorado Springs which were very appealing to first time home buyers who maybe should NOT have qualified to buy a home.

Eastside Colorado Springs Real Estate Market: 169 foreclosures
28.5% of eastside home sales were a foreclosure.

Like central Colorado Springs, the Eastside has a lot of smaller and less expensive homes – which gives us more potential for foreclosures in this area.

Northeast Colorado Springs Real Estate Market: 174 foreclosures
24.3% of northeast home sales were a foreclosure.

The Northeast part of Colorado Springs is one of the largest areas of town, with more homes than almost any area.So, although this area was the 4th largest contributor to the city’s foreclosures, it is actually right in line with the city average.

Northwest Colorado Springs Real Estate Market: 44 foreclosures
13.8% of NW Colorado Springs home sales were a foreclosure.

The Northwest part of Colorado Springs wins as having the fewest foreclosures AND the 2nd lowest concentration of forecloses within its area.

Northgate and Flying Horse Real Estate Markets: 48 foreclosures
19.9% of Northgate and Flying Horse home sales were a foreclosure.

The homes in Flying Horse and Northgate are larger, sit on larger lots and generally (like Briargate) are not first-time-home buyer homes. In addition to this, the geographic area is smaller. All of this leads to a very small number of foreclosures.

Old Colorado City and Westside Colorado Springs Real Estate Markets: 88 foreclosures
25.9% of westside and Old Colorado City home sales were a foreclosure.

The Old Colorado City and Westside areas of Colorado Springs sat right at the city average and right in the middle of the scale when representing area foreclosures.

Powers, Marksheffel and Banning Lewis Ranch Real Estate Markets: 315 foreclosures
27.9% of Powers and Banning Lewis Ranch area home sales were foreclosures.

This area contributed the MOST foreclosure sales to the Colorado Springs real estate market in 2009. I attribute this to how new the area is and how many people bought new homes with the Adjustable Rate Mortgage. However, this is one of the largest and most densely packed areas of the city, so the actual ratio of sold homes to foreclosure sales was not much higher than the city average.

Southeast Colorado Springs Real Estate Markets: 289 foreclosures
43.8% of S/E Colorado Springs home sales were foreclosures.

Southeast Colorado Springs was the second highest contributor to the Colorado Springs Foreclosure sale market, at 19%. However, it DID rank the highest for foreclosure sales concentration per area.

Southwest Colorado Springs and Broadmoor Real Estate Markets: 99 foreclosures
20.4% of S/W Colorado Springs and Broadmoor home sales were foreclosures.

Southwest Colorado Springs has a drastic difference in property area types. The eastern part of this area has some of the lowest priced homes in the city, whereas the western parts have some of the most expensive homes ever built and sold in Colorado Springs. This always is “interesting” when trying to accurately compare this area to other real estate markets.

So, although the graph shows that the Powers Area was the largest contributor to foreclosures, it is interesting to note that it was the S/E and Central areas of Colorado Springs that had the highest concentrations of foreclosures sell in 2009.

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Based on Colorado Springs home information from the Pikes Peak REALTOR Services Corp. (”RSC”), for January-December 2009 .  RSC does not guarantee or is in any way responsible for its accuracy.  Data maintained by RSC may not reflect all real estate activity in the market. Data includes any property listed as pre-foreclosure, short sale, foreclosure, REO, repo or bank owned.

One of the questions that we hear a lot is:

My Colorado Springs Home is in Foreclosure. When Do I Need to Move Out?

If there are almost 30,000 Colorado Springs foreclosures, then this question is being asked a lot.

GOOD NEWS:  Just because you fall behind on your mortgage payment, and cannot catch up, does NOT mean that you need to move out immediately.

In fact, you may have up to 7 months to stay in your home before you need to move out!*

Let’s understand the foreclosure process in Colorado:

• You are a few days late on your mortgage payment (but less than 30 days). This means that you are DELINQUENT. You do not need to move out.

• Once you become 30 days late, you are in DEFAULT. (Usually this is because you are in a financial situation that has made it difficult for you to keep up on your bills – NOT because you just “don’t want to” pay your mortgage.) This is when the collections departments start harassing you endlessly. They can be outright mean. You do not need to move out.

• During this time, you may qualify for either a loan modification (where the lender changes the terms of your loan to accommodate your current financial situation) or they may agree to work with you to catch up on your payments a different way. The ONLY way that his can happen is if you ASK THEM and explain your financial situation – and why you have been unable to pay. Right now, banks and lenders are more than willing to work with people to get caught up on their mortgages, as long as they know what is going on …
  
  
• If your loan is an FHA loan, it will become a FORECLOSURE after 3 missed payments. If your loan is NOT an FHA loan, then the lender can decide to start the foreclosure process the MINUTE you miss just ONE payment. This just means that the lender has transferred your “file” to foreclosure attorneys to start processing it to be sold at the public auction. You will start getting all kinds of legal notices and even more harassing phone calls.  You do not need to move out.

• Once your “file” has been transferred from the attorney to the Public Trustee, your home will be placed on the Election and Demand list, with a date that the home will be auctioned off. This date is generally between 110-125 days in the future (roughly 3-4 months). [FIND YOUR FORECLOSURE DATE HERE] You will get even MORE legal notices and harassing phone calls. This is also when you will start getting a bunch of mail from both real estate agents and investors asking you to sell your home. [Beware of Foreclosure Assistance Scams!] You do not need to move out.

• If you do not catch up on your mortgage (which will include all your missed payments, late fees and legal fees) OR if you do not CURE the loan through selling your Colorado Springs home (or short selling the home – see below), then your home will be SOLD AT THE PUBLIC AUCTION on the date posted by the Public Trustee. MOVE OUT BEFORE THIS DATE or you will be evicted. (Should this be the option you take, consider asking your bank for a “Cash for Keys” option, where they may give you a few hundred bucks to leave the property on time and in decent shape.)

Based on this information, you could possibly live in your home for up to another 7 months after your 1st missed payment, before HAVING TO MOVE. Use this time to save your money to get into another home.

More Questions? Contact us for a free, no-obligation,
PRIVATE consultation regarding your situation: 719.434.7525

Now,there are options that could both have you AVOID foreclosure AND stay in your home even longer.

Read More: Foreclosure SUCKS – You Have Options

Currently, the Colorado Springs Pikes Peak MLS only shows 1,056 foreclosures either for sale or under contract (as of 11/2/2009). This means that there are about 28,000 people out there who MAY not know that they have a LEGAL and EFFECTIVE way to avoid a foreclosure. This is called a short sale.

Read More: Why a Colorado Springs Short Sale is a Great Alternative to Foreclosure

If you owe more than your home could sell for, a Colorado Springs SHORT SALE may be a perfect option. Not only will a short sale be a softer hit on your credit than a foreclosure, but a competent real estate agent may also be able to push back the foreclosure date to accommodate a successful closing – giving you even more time to prepare to move.

Additionally, when a Colorado Springs home forecloses the bank has the right to go after the foreclosed homeowner for the DEFICIENCY between the loan amount and what the home sold for (after fees). In a short sale, a competent real estate agent can negotiate with the banks to NOT go after the homeowner for this amount, but, instead 1099 (tax) them for the amount.

Example:

• Foreclosure: The deficiency (minus fees) in the foreclosure was $30,000. The homeowner MUST pay back the bank that $30,000.
• Short Sale: The deficiency between what was owed and what the home sold for (minus fees) was $30,000. The bank will send the homeowner a 1099 for $30,000. This shows up as “income” for the homeowner and that homeowner will be taxed on that amount.** My thought? It is better to pay the TAX on the amount than pay the WHOLE amount … yes?

*Please contact a real estate attorney to see how this does or does not apply to you.
**Consult with a tax attorney on how this will affect you, specifically.

If you are still trying to decide what to do, please give us a call. We understand that you are in a crazy and emotional situation and we may be able to help you … with NO OUT OF POCKET EXPENSE TO YOU.

We are Certified Distressed Property – Colorado Springs Short Sale Experts and know how to help you.

Contact us: 719.434.7525 or ShortSaleHelp@wagneriteam.com

How does Colorado Springs compare to the rest of the country?

What I find interesting is that El Paso County may rank high for foreclosures, however, we ALSO rank in the TOP 20% for median household income and have some of the country’s lower unemployment rates (between 5.1 – 10%).

Many Thanks to Tony Greer – Canyon City Real Estate Agent for reminding me of this great site!

Related Articles:

• What Should I Know About Buying a Colorado Springs Foreclosure?
• 3 Tips on How to Refinance Your Colorado Springs Home to Avoid Foreclosure
• Why a Colorado Springs Short Sale is a Great Alternative to Foreclosure
• Top 3 Ways to Avoid Foreclosure in Colorado Springs
• Foreclosure SUCKS – You Have Options