Foreclosure Cash

Real estate short sales happen when the bank or mortgage lender agrees to discount a loan balance because of a financial adversity on the part of the borrower. The home owner sells the property for less than the outstanding balance of the loan, and gives the earnings of the sale to the lender.

However, it is not guaranteed that the short selling offer will be accepted or rejected by the bank. Just because a listing is advertised as a short sale does not mean it is a short sale. It means that the short sale listings agent and seller hope that the property will sell as a short sale and the bank will accept the offer. The list price of a short sale home has very little impact on the actual price a bank may accept.

Top five reasons for rejection

• The price offer is very low: Banks will request assessments and may also ask for a Broker Price Opinion (BPO). So when a short sale offer is presented to the bank, the offer should also include a comparative market analysis that validates the price in the short sale offer. If the bank believes that a foreclosure on the same property will generate more income for the bank, then it will reject the offer of a short sale.
• Documentation problem: Banks have a history of losing documents. No matter how many times you send the documents, they will somehow manage to misplace the documents. Also, if you have not sent all the correct documents, then the sale will not be granted.
• The seller is not eligible for the short sale: If the seller is not able to present to the bank a convincing ‘debt forgiving hardship letter’, and also if the seller is unwilling to work out a repayment plan with the bank, then the bank will not go ahead with the short sale transaction.
• The buyer is not eligible: To determine the buyer’s qualification, the bank will examine the buyer’s credit history, length of time on the job, debt ratios, and many other criteria. If the bank is not satisfied with any of these aspects, then there is every chance that the transaction will be rejected.
• The bank has released the asset: If during the short sales negotiation the bank has sold the mortgage to another lender, then the bank has no right to approve a short sale.

If the short selling offer can be pulled off successfully, then it will benefit all – the buyer, the seller and the lender.