Colorado Springs Realty Patricia Beck

With more short sales and bank owned properties in many neighborhoods across Colorado Springs, it is not uncommon for homeowners to have neglected yards and homes on their street. Unfortunately, bank owned and short sale properties often hurt the market values in an area or may impact your own home from selling if there is a neglected property is next door. So what do you do if there is a neglected home on your street?

Talk to your neighbor- Unless your neighbor is violent or hostile, talking about it directly may be your best option. You would be surprised what can come out of a conversation with your neighbor and you may learn something about their situation that may explain why the home has been so neglected. If the home is vacant or it is bank owned, this is not going to be an option.

Offer a helping hand- Sometimes the best thing to do is gather up the neighbors and work together to take care of the exterior of the home. If everyone pitches in, the lawn can be mowed, trees pruned, flowers clipped, and weeds pulled. Taking care of a neglected home keeps your street nice and hopefully will keep your property values from further dropping.

Call the HOA- One reason for a Home Owner’s Association is to maintain the market values in a neighborhood by having certain standards residents must follow (i.e. you can’t paint your house pink or you can’t park a huge RV on the street). Placing a phone call to the HOA and putting the matter in their hands may be an option as well. It is the association’s job, is it not?

File a complaint- If a property on your street is violating City Code, you can file a complaint with Code Enforcement. Hopefully, their pile of junk in the front yard will be soon removed.

Colorado Springs Real Estate information and services

Sellers in Colorado Springs need to research the tax and economic consequences prior to making the decision of whether or not to short sale their home.

Formerly, homeowners who sold their home through the short sale process would be 1099ed for the difference. The homeowner used to be required to pay taxes to Uncle Sam since it was viewed by the IRS as income! The Mortgage Forgiveness Debt Relief Act of 2007 should help alleviate the tax problems related to debt forgiveness for homeowners in this situation.

Although sellers do not have to pay taxes on the mortgage deficiency to the IRS any longer, there are still other negative implications the seller must be aware of and therefore, seek the counsel of a professional attorney or accountant regarding their specific circumstance.

If the bank accepts a short sale, the lien holder does have six years to file a deficiency judgment against the seller. In other words, if someone who previously sold their home as a short sale went on to purchase another home, the bank could put a lien on the home for the deficiency amount if done within the six year time frame. I personally have not heard of banks doing this to every single owner who sold their home via a short sale but sellers need to be aware of this and seek legal counsel regarding their options and what measures can be taken to avoid this from happening.

In many instances, the bank will not entertain the idea of a short sale with homeowners unless they have missed mortgage payments. Missing mortgage payments, foreclosure, and a short sale can all negatively impact an individual's credit. Everyone's situation is different, which in turn, can create different outcomes and consequences for each seller.

The Colorado Real Estate Commission does have a Short Sale Addendum to accompany short sale transactions for buyer and seller to review.

Providing real estate information and services for Colorado Springs home buyers and sellers.

You cannot afford to make your mortgage payment; maybe you have heard something about the option of a short sale and are not sure what it is. To put it simply, a short sale is the situation in which a homeowner cannot sell their home to cover the amount owed on their loan. This is often referred to as being “upside down.”

Let's pretend you obtained a 30,000 HELOC in addition to your $170,000 mortgage and are now in a situation where you can no longer make payments. You find out from your real estate agent that homes in the area like your own are not selling for more than $165,000. You owe $200K but can only sell for $165K and after closing costs and paying commissions there is no way you can cover the loan amount you owe. This is considered a short sale situation.

Will the bank accept the short sale if a buyer comes along who is willing to pay $165K for your home? It depends on the bank and your specific situation. When you find yourself making decisions regarding the possible short sale of your home, it is important to obtain the expert advice from a real estate attorney or other real estate agent with experience in short sales.

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Many different circumstances bring homeowners to a position where they cannot afford to pay their mortgage and often times, these unforeseen circumstances cannot be avoided such as a loss of a job. There are many homeowners in Colorado Springs who have found themselves in such a position and are not sure what to do. Should I just foreclose on my house? Should I try to sell even though the market values in my area have dropped? Should I call the bank and let them know I can no longer make my payments?

There are many options if a homeowner in Colorado Springs finds themselves in this situation and the worst decision is to do nothing about it! Many homeowners ignore what is going on and hope for the best and that is a bad idea.

If you know that you will no longer be able to make your payments it is wise to call your bank and talk to them before the situation gets worse. Many banks are willing to work with homeowners by modifying their loan, freezing their interest rate on their Adjustable Rate Mortgage (ARM). Remember, each individual situation is different so it is important to obtain advice from a competent professional.

Colorado Springs Real Estate information and services

There are numerous factors to consider when purchasing a bank owned property: