How do I Get My Short Sale Approved by the Bank?

If you're selling you home short, it's likely that you don't have any equity.  You might be thinking, well, if I'm going to walk away with nothing, I might as well sell it fast.  Well, yes and no.

Pricing Your Short Sale Right Is Important

You can't simply lower the price so low that it's well below market value. With a short-sale, the lender is forgiving debt, and each dollar you don't get for the home is a dollar that the bank has to write off. Believe me, the banks are not interested in giving short-sale folks an easy way out. The banks want assurance - typically several assurances - that they are getting close to market value for the property, and minimizing their losses. So you need to make sure that your home is priced right.

How Do I know My Short Sale is Priced Right?

Short Sales Aren't Easy - But the Benefits
Can Outweigh the Difficulties

A local Realtor in your area, with experience doing short sales and regular sales, is a good source for that information. Don't just ask any person with a real estate license! Short-Sales require experienced agents to make sure that they are setting the right expectations, getting the contracts right, are prepared for the longer sale cycle that has become the norm for short-sale. In addition, the appetite for different lenders to do short sales may also come in to play, and basically their experience will be a huge asset for you. Once you know you've got the right agent, they should be able to guide you to the right price point, and make sure that the bank won't decided that they can get much more than what you were able to get.

Take Care of Your Short Sale Property

Since we're trying to get the most for you home (remember, the MORE you get, the LESS the bank has to eat, and the more likely they will agree to the short sale), taking care of the property is key. Just as with a traditional sale, better condition will mean more buyers, and a better price for you home.

It is likely that in most cases, a well cared for home will be selling expensively relative to the local market, and since that's the case, that means you'll look good on all the BPO (Broker Price Opinions) that will done on the property. BPO's are done by the bank to make sure that the home has sold near the max that the bank can get for the property.

As another note, don't go out and get the most expensive lawyer you can find to do your short sale, figuring the bank will be paying your attorney costs. A) They may not and B) the more your attorney costs, the more expensive the deal gets for the bank - and that's bad! Make sure you know who and what your getting as part of the process, and what it's likely to cost.

Even if Your Short Sale Home is Top Notch, You May Not Get Top Dollar

Most buyers are aware at this point that purchasing a short sale involves waiting. Lots and Lots of waiting in most cases. The banks are slow in evaluating their options, and want to make sure that a short sale is their best (and usually their only option) outside of foreclosure. Since there's waiting involved, you may have to pay the buyers to wait around - and that usually results in lower than market price. For the most part, in my experience, the banks

Related Articles

• How to Buy a Short Sale
• Short Sale Hardship Letter Example
• How to Write a Hardship Letter
• How is My Credit After a Short-Sale?
• Short Sale Terms

understand this concept. Short Sales don't drive the price down very much - 2-5% in my opinion - but they are usually a discount to the overall market. Is it worth it? Well, that's another question...

Remember, there are other Factors Besides Home Pricing

With any short sale, a number of factors need to line up for the bank:
A) The short sale needs to be a better financial outcome for the bank than foreclosure.
B) The Property needs to be sold at or near market value
C) The Seller of the property needs to have Financial Hardship (See my Hardship Letter Section)
D) The bank needs motivation to cut their losses.

If you don't have all the elements lined up, the lender may decide that they won't work with you. If they think the price for the house is too low, they may ask the buyer to pay more - and that can have disastrous results for the deal you have in place.

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Do Good Things Today!

 Matt Heisler

*All information is posted in good faith and is assumed to be reliable, but may rely on third party information sources.