Colorado Guide

Step by Step Guide to our Short Sale Program

Our short sale program works because we follow a strict protocol on all transactions so that each contract has the same powerful impact when negotiating with a Lien Holder. Our success (and yours) is dependent on each real estate agent strictly complying with the established guidelines.

We refer to this Step by Step Guide as the “Yellow Brick Road” to short sale success. If you Follow the Yellow Brick Road we will have the tools and resources needed to achieve the best outcome for all parties. If you deviate from the Yellow Brick Road, bad things will happen and unpleasant surprises will follow (from the Lien Holder, of course). This means that we can’t do our job unless you do yours!

We will be firm in holding all members strictly accountable for following the process and guidelines of this program. Don’t worry. Once you see the positive effects of the process, you’ll want to do it again and again.

Click here for a complete list of all documents for Colorado – CREC (Colorado Real Estate Commission).
Click here to download the full Step by Step Guide to the Short Sale Program for Colorado. (PDF)

When Taking the Listing
1. Seller must sign either the Addendum to Listing Contract or the Addendum to Listing Contract Flat Percentage. They are identical documents except that the Flat Percentage form pre-determines the authorized price reductions.

a. This form is in addition to the standard Listing Contract and short sale addendum to the Listing Contract.

b. A Short Sale Program Summary has been provided to explain the program concept and details to the Seller and Buyer.

i. It is highly recommended that Sellers and Buyers initial this document to acknowledge they’ve read and reviewed it.

c. The Seller’s Broker is advised to use the following pricing guidelines

i. Determine the low and high end price range for the property.

ii. The starting list price should be 30% of the differential in the low end and high end price. For example, if the range between low and high is $50K, the 30% mark would be $15K. Add $15K to the low price as the low end price as the starting list price.

iii. Establish a series of price reductions in the Listing Contract every 7 to 10 days. The price reductions should be between 3% and 5% each.

iv. The goal of the pricing guidelines is to have a market price ratified contract within not more than 30 to 40 days of entering the property in the MLS.

v. Ideally, a ratified contract will be received between the 20th and 40th day on the market and after 2 – 4 price reductions.

2. Provide Seller with a copy of the Addendum to Contract for information purposes only.

a. The Seller should not sign the Addendum to Contract yet. It will be signed when a Purchaser presents an offer. It’s meant to prepare the Seller for events yet to come.


Law Firm’s Financial Documents to Provide to Seller
1. The Seller must provide copies of all financial documents to the Law Firm as a condition of listing the Property with you. Email (copy and paste) the following links to the Seller and request that they complete the forms AS INSTRUCTED within the forms themselves:

2. The documents are created to be self-explanatory. The Seller should direct any questions about the documents to the Law Firm as instructed in the Law Firm Engagement Letter.

3. After completing and gathering the requested forms and information, the Seller must send all executed documents to the Law Firm. Seller must also send a check for $50 to the Settlement Agent for the preliminary title report. This request is more fully set forth in the Seller Document Checklist.


After Taking the Listing
1. Congratulations on getting the listing. Let’s all do our part to help this homeowner in crisis. Now you must notify both the Closing Company and the Law Firm that they are about to get a new client.

a. Notify the Closing Company by emailing a Request for Title Report. This form asks the Closing Company to prepare a preliminary title report for the Law Firm’s review.

i. Only approved closing companies may work with the Sellers in our program.

ii. First American Title Insurance Company and Fidelity National Title Insurance are the only two approved closing companies unless otherwise authorized by the Law Firm.

b. Notify the Law Firm about your listing by faxing or emailing a Request for Short Sale Representation of Seller. In this form, you will need to provide the name and contact information for the Closing Company. Along with the Request for Short Sale Representation of the Seller, you will need to provide the following executed documents:

i. The Listing Contract along with Short Sale Addendum (if applicable).

ii. The Addendum to Listing Contract signed in Step 1.

iii. A completed Comments on Property Condition form.

iv. A completed Request for Title Report as noted above.


Wait for the Law Firm to Review Seller’s Documents
1. Do NOT list the Property in the MLS until the Seller has met all of their conditions.

a. Seller must deliver all financial disclosures, described in Step 2 above, to the Law Firm for review.

2. Closing Company must provide the Law Firm with a title report.

a. The Law Firm will review the Seller’s financials and the title report to determine Seller’s eligibility for a legal representation.

3. The Law Firm will notify Seller and Seller’s Broker of their acceptance or rejection of the request within 2 business days of receipt of all required forms. The Law Firm cannot issue a final determination until all requested forms are provided.

a. The Law Firm will not reject an application without discussing options and possibilities with both the Seller and Seller’s Broker.

4. The Seller’s Broker must register the Property with the MLS within 48 hours of receiving acceptance from the Law Firm.

a. It is HIGHLY RECOMMENDED that the Seller’s Broker place the following comment in the remarks section of the MLS: “Buyer must sign Seller Short Sale Addendum. Call for details”


When Receiving a Contract Offer
1. The Seller’s Broker should email a copy of the Addendum to Contract, along with the Short Sale Program Summary, to the Buyer’s Broker prior to Buyer submitting an offer.

a. All ratified contracts must include an executed Addendum to Contract in order to participate in the CHRE Short Sale Program.

b. The Law Firm will not negotiate any short sale contract that does not include this addendum.

c. The Short Sale Program Summary is provided to explain the program concept and details to the Buyer.

i. It is strongly recommended that Buyers initial this document to acknowledge they’ve read and reviewed it.

ii. If the Purchasers have remaining questions or concerns, they should be encouraged to contact the Law Firm directly.

2. The final Purchase Price (inclusive of all Seller concessions) cannot be more than five percent (5%) less than the last advertised List Price.

a. The Law Firm will refuse to negotiate any short sale contract that is more than five percent (5%) less than the last advertised List Price.

b. Seller Concessions will be subtracted from the Purchase Price to determine a final Purchase Price.

3. The Selling Broker must collect the $1,000.00 performance deposit check from the Seller (made payable to National Real Estate Law Group, PLLC) at the time of contract ratification.


After Contract Ratification
1. Congratulations on getting a “full price” ratified offer. Now you must notify both the Closing Company and the Law Firm that it’s time for their work to begin.

a. Notify the Closing Company by emailing a Request for Draft HUD-1 Settlement Statement. This form asks the Closing Company to create a draft HUD-1 based on the contract terms.

i. Be sure to include all special fees, costs or adjustments that are unique to this transaction on the request, as indicated.

b. Notify the Law Firm about the ratified contract by faxing or emailing the We Have a Ratified Contract! notice. This notice must be signed by the Seller’s Broker.  Along with the notice you will need to provide the following documents and reports:

i. Ratified Contract plus all Addenda.

ii. MLS printout with a price change history.

iii. A traffic and showings report (generated from lockbox access).

iv. A completed Request for Draft HUD-1 Settlement Statement as noted above.

v. A signed Assignment of Commission Authorization.

2. The Seller’s Broker must deliver the Seller’s $1,000 performance deposit check to the Law Firm within five (5) days of submitting a providing notice of a ratified contract.


Completing the Appraisal and Property Inspection
1. Immediately upon receipt, the Law Firm will submit the “short sale package” to the Lien Holder(s) for consideration. The package will include:

i. Ratified Contract and Addenda

ii. Listing Contract and Addenda

iii. Draft HUD-1

iv. MLS records and reports

v. Title report and tax records

vi. Seller financials and authorizations

vii. Law firm cover letter with request for approval

2. The Buyer must proceed with completing the property inspection and appraisal as required by the Contract.

 

3. The Buyer’s Broker must fax or email the Law Firm a copy of the Inspection Resolution addendum when completed.

a. Seller’s Broker must notify the Law Firm if inspection negotiations resulted in any adjustment to the Final Purchase Price.

4. The Seller’s Broker must fax or email the Law Firm a copy of the Buyer’s lender appraisal when completed.

a. Seller’s Broker must notify the Law Firm if the appraisal resulted in any adjustment to the Final Purchase Price.

5. The Law Firm will forward the appropriate documents on the appraisal and inspection to the Lien Holder(s) upon receipt – only if the documents support our short sale request.


The Negotiations Begin in Earnest
1. The greatest challenge is getting a designated negotiator appointed by Lien Holder(s). The Law Firm will attempt to contact the Lien Holder(s) at least once every three to five business days to follow up on the receipt, review and approval process.

a. No representations, guarantees or assurances are made by the Law Firm about how long it takes each Lien Holder to appoint a designated negotiator.

b. The Law Firm can only commit to continued attempts to contact the Lien Holder(s) in order to begin discussions and negotiations.

2. All attempts to contact the Lien Holder(s) and all conversations with the Lien Holders(s) will be catalogued by the Law Firm and made available on a regular basis to the appropriate parties in the transaction, as necessary.

a. The Seller and Listing Broker are discouraged from engaging in any direct communications or negotiations with the Lien Holder(s) – either directly or indirectly – once the Law Firm is engaged.

3. The Seller must agree to provide the Law Firm with any written correspondence received from the Lien Holder(s) and to communicate any conversations with them to the Law Firm.


The Finish Line
1. The Law Firm will contact the Seller and Seller’s Broker if any counter offers from the Lien Holder(s) require Seller consideration.2. Seller will be advised of the terms of any final offer(s). This information may be protected by attorney/client privilege.

a. Seller may accept, or reject, the offer based on advice of counsel.

3. If Seller accepts the offer, all parties are notified to proceed to Closing.

4. If Seller rejects the offer, all parties are notified and Buyer is requested to provide proof of payment for inspection(s) and appraisal.

a. Buyer will be reimbursed their actual costs for inspection(s) and appraisal upon receipt by Law Firm of proof of payment and written instructions that the Contract is void.

b. A foreclosure by the Lien Holder will be considered a “written rejection” of the short sale offer and will entitle the buyer to reimbursement of costs and expenses from the performance deposit as described above.


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