Why Short Sales are Uncertain

Unless a lender has agreed in advance to accept a short sale, the outcome is always uncertain. Just because a property is listed as a short sale doesn't guarantee it will actually be sold that way. The chances of a bank approving a short sale can vary, making it important to understand common reasons why banks reject such offers.

Understanding Short Sales

A short sale occurs when a lender agrees to sell a property for less than the mortgage balance. This can happen when the sales price fails to cover the full mortgage amount and selling costs. It's possible for a seller to have multiple loans, in which case both lenders need to agree to a short sale.

Be Wary of Short Sale Prices

The listed price of a short sale property may not reflect what the bank is willing to accept. Some agents may advertise at unrealistic prices to attract offers. Even if a seller agrees to a price, the lender may reject it. Sellers should always ask for a waiver of deficiency to avoid owing money after the sale.

Reasons for Rejected Short Sales

Lenders scrutinize short sale offers for various reasons. A low offer price may be rejected if the lender believes they can make more from foreclosure. Incomplete documentation can also lead to rejection, as well as sellers or buyers not meeting qualifications. Lenders may also reject offers if they no longer hold the mortgage or service the loan.