In a short sale, you have defaulted on your loan and cannot make the payments, but your lender decides to allow you to sell the home for less than your loan is worth. In some cases, lenders will require the borrower to sign a note agreeing to pay back the difference between the sale price and mortgage amount.
Can you force a short sale?
Short sales are voluntary and require approval from the lender. Foreclosures are involuntary, where the lender takes legal action to take control of and sell the property. Homeowners who use short sales are responsible for any deficiencies payable to the lender.
Why are so many banks rejecting short sale offers?
The list price of a short sale home generally has little bearing on the actual price a bank may accept. The list price may be too high to attract an offer or too low for the bank to accept. Some agents advertise short sales at unbelievable prices, hoping a buyer will be enticed to submit an offer.
What makes a home fall into a short sale?
Short sales happen when a bank agrees to accept less than the amount of the mortgage the seller owes to the bank. The home could appear to be above water, but if after the fees to sell are deducted, plus the mortgage, the funds are short, then it falls into short sale territory. Two loans or one loan may encumber the property.
Can a bank reject a short sale for underwater property?
Many underwater sellers are worried that their banks may reject a short sale when the truth is, if the seller and the property qualifies, most banks will readily approve a short sale. As with most truisms, though, there are often exceptions.
Can a bank make money on a short sale?
Banks are in the business of making money. Banks can sometimes make more money from a foreclosure than a short sale. But more often than not, banks want to minimize losses and will consider a short sale under the following conditions: Seller provides a documented hardship.
