INFORMATION FOR HOME BUYERS:
The information about "Short Sales" and the "Short Sale Addendum" below is similar for both home Sellers and Buyers. But a home Buyer needs to have some different information in order to determine which home to buy.
See What You Should Know About Buying “Short Sales” and Foreclosed Properties
INFORMATION FOR HOME SELLERS:
2008 signals major changes for foreclosures and "short sales". A new Colorado Foreclosure law took effect January 1, 2008 and some new Colorado Real Estate Commission (CREC) rules and forms are now mandatory.
The CREC recognized both the impact of the large number of foreclosures and the fact that there are criminally-minded predators willing to take advantage of people in desperate situations.
The new foreclosure law dramatically changed the foreclosure process and timetable from prior law. For a summary of the new law's provisions go to the real estate law center that my attorney provides online. The major thing to note is that there is a longer time between the filing of the foreclosure papers with the county trustee (the Notice of Election and Demand "NED") and the foreclosure sale. But it also eliminates an "owner's redemption period" following the sale. Call me about how this might affect selling a home before or after an "NED" has been filed.
A "Short Sale" is an agreement in which the lender agrees to accept a payoff that is short of (less than) what is owed. This is sometimes agreeable to the lender because they might get a higher net amount than if the home goes through foreclosure. The CREC noted problems for both Buyers and Sellers in short sale situations so they issued a new ruling and some new forms.
The forms can be confusing, so call me if you have some preliminary questions about the forms. I also recommend calling your attorney for specific legal advice about the forms and whether a short sale is the best route for you.
The first form is an addendum to a contract to purchase a home. The "Short Sale Addendum" will be mandatory whenever a Buyer wants to buy a home that is subject to a short sale. It gives mandatory disclosures to both Buyer and Seller, describes how the addendum makes the contract conditional upon certain events, and how it revises certain dates and deadlines of the contract.
The second form, the "Seller Authorization Form", authorizes the Seller's lender (if in a short sale situation) and/or the Lender's attorney (if in foreclosure) to release information to the Seller's broker and certain other entities. It is necessary to allow release of confidential information regardless of privacy laws.
It's complicated, but can be made comprehendible. I've taken several classes lately to keep up with the new laws.
See "What you should know about Short Sales" for a fuller explanation.
See this Q&A #1 for some answers that came up about Short Sales in a divorce situation.
My goal, as always, is to make real estate transactions as smooth and secure as possible.