A short sale is when an owner of a home is trying to sell their home for less than what they owe on the mortgage. The seller hires a realtor to go out a find a buyer for their home. Once an offer is obtained that the buyer and seller agree on the seller will submit the offer to their current mortgage holder to forgive or write off the difference. If the seller owes $200,000 and the offer is for $150, 000 they would be asking the mortgage company to write off $50,000 minus closing costs. There is nothing in a mortgage stating that the mortgage company MUST do a short sale and forgive the remaining balance. When the bank receives an application from a seller to do a short sale the seller must submit a package to the bank basically de-qualifiying themselves for the mortgage and proving a true hardship. The seller must provide recent tax returns, bank statements, income/assest verifications and a letter stating why the seller can no longer make the payments and why the mortgage company should proceed with the short sale. Once that is complete the mortgage company has a process to which they try to establish fair market value of the property as part of their process.
Lately we have heard that thousands (yes, THOUSANDS) of short sale applications are being submitted to banks weekly on a national level that need to be processed. Take a number and stand in line. Some banks have implemented systems to get these approved in a matter of weeks but most still take a few months to get approvals/denials on. I have seen them go 6+ months in some cases. Not all cases the short sales are approved either no matter how long you’ve waited or if you are paying cash or not. So many factors go in to the banks decision for them to approve/deny the short sale. They just take time.
One thing to really take note to is that in most cases the bank does not come up with the list price, the seller does. The seller is just out fishing for offers so they can get one and submit it to the bank to see if the bank will do it. I would say that 90%+ of the homes listed for sale currently do not have a bank approved list price.
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