The Bank's Position


There are many factors involved in the bank's decision making process that will allow a property to be approved for a short sale. Some of the main issues the bank will take into consideration are the following:


  • Is the seller in a dire financial situation due to hardship caused by unforeseen circumstances such as loss of employment, divorce or serious illness?

  • Is it more cost-effective to simply repossess the property, make any necessary repairs and sell it through a real estate agent as a foreclosure sale?

  • Are there other parties on the lien who can be held responsible for the balance owed on the mortgage?

  • Does the bank have a large number of properties already in default that they are currently holding on its books?



Negotiating the Sale


Negotiating Short Sales

Persistence is the key to success. The loss mitigation department of the bank is where the battle will begin and they will likely be understaffed and overworked. Therefore it is imperative that the information delivered to the key decision makers be complete, concise and accurate. Our agents are trained to be proactive negotiators that understand the bottom-line needs of the bank's asset managers as well as the requirements of any potential investors that may have the final word on the short sale approval.


Avoiding the Pitfalls


  • You need an experienced agent that understands how to submit a complete package to the bank and knows the key factors involved in expediting the sale. Your agent or short sale team should be prepared to negotiate with the bank on a daily basis for up to three months, if necessary. Most agents in today's market are overwhelmed with their existing workload and growing inventory of stagnant listings. Negotiating a short sale for a client may seem like a good idea to both parties in the beginning, but most agents will realize a short time into the process that they simply don't have the time or the expertise to successfully negotiate a short sale for their client.

  • The bank generally won't make a deal unless the seller has missed three payments or more and is in default or near foreclosure, however the new administration's initiatives to reduce foreclosures are motivating lenders to make exceptions to the rule. In addition, the bank will look at the seller's financial situation in great detail and in some cases will conduct a forensic investigation on the seller's recent financial transactions. The seller will have to have to prove a loss of income and assets due to illness, loss of job, divorce or some other severe hardship. If the seller has recently been laid off and still has substantial assets, the bank will not be likely to negotiate.

  • Is there a second mortgage on the property or a line of credit? If so, your agent will need to negotiate simultaneously with the other bank holding the second lien. At this level, it is critical that your agent has the tenacity and experience to convince both parties to agree to the terms of the short sale. In many cases, the second lien holder will hold the entire short sale process hostage as a bargaining chip to extract the maximum amount of money out of the seller before they will approve the sale. In this situation, the second lien holder may aggressively demand more money from the seller, but their tactics can backfire if they ask too much of the seller, as he or she may choose to just let the property go into foreclosure and leave the second lien holder with nothing.

  • The short sale buyer must be well qualified. The bank will require the buyer to provide a pre-qualification letter with the submission package and in some cases may require a pre-approval letter. Proving to the asset managers within the loss mitigation department that the buyer is serious and capable sends a positive message and will strengthen your negotiating position.

Short Sale Basics

What Is A Short Sale?


A sale of a property in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he or she owes.



"I had my listing with another agent and it was not attracting any serious buyers. After listing my property with a SHORTsense agent, we had multiple offers within a week. My agent had the knowledge, attention to detail and perseverance to negotiate a very complex 7-figure short sale settlement with two different lenders. I would highly recommend them to anyone considering a short sale." Eugene - Beverly Hills, CA


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