Frequently Asked Short Sale Questions
What qualifies as a hardship for a short sale?
Everyday hardships include job loss, divorce, medical bills, death of a spouse, or reduced income. We'll help you draft a proper hardship letter.
How long does a short sale take?
The average short sale in Colorado takes 60 to 120 days. Some banks move faster depending on the offer and documentation.
Can I live in the home while the process is underway?
Yes. Most homeowners stay in their home until the short sale closes.
Will I owe the difference after the short sale is completed?
Only if it is not negotiated away. Lenders often waive the deficiency when the terms are handled correctly, and we work to get you released from liability in writing. It matters more than most people realise: in Colorado a lender has six years to pursue the shortfall, and releasing the lien is not the same as releasing you. Here is the exact language to look for in your approval letter.
How does a short sale affect my credit?
It impacts your credit, but typically less than a foreclosure or bankruptcy. On a conventional loan the wait to buy again is four years from the closing date — or two years if you can document extenuating circumstances and put at least 10% down. After a foreclosure it is seven. Here is how the waiting period actually works.
Will I owe tax on the forgiven debt?
Possibly, and this changed recently. The federal exclusion that made forgiven mortgage debt tax-free on a primary residence expired at the end of 2025, so a forgiven balance is generally treated as taxable income now unless another exception applies. Insolvency covers many underwater sellers. What the change means, and what to ask a CPA before you sign an approval.
Do I have to pay any fees or commission?
In most short sales the commissions and closing costs are paid out of the sale by your lender rather than out of your pocket. It is part of what gets negotiated in the approval, so we confirm it in writing before you commit to anything.
Can I do a short sale with more than one mortgage?
Yes. Every lienholder has to agree, and a second mortgage or home equity line needs its own negotiated release. That is where these most often stall, so we deal with it early rather than at closing.
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