A short sale offer is never accepted by the bank or lender easily. It may be rejected on various grounds, your financial hardships not withstanding. Short sale specialist says that banks may not entertain a short sale offer even if it yields full-price. This may sound surprising, but it is often the case.
The reason for this is that the full asking price for which the property has been listed may not be equal to the amount owed on the property. In fact bank views the listed price as the realtor’s price that he fixed with the hope of finding someone to put in contract followed by an approval from the bank. Banks are skeptical about the listed price because the price may be lower than what’s owed on the property. Ratifying the short sale process would mean undertaking a loss. Bank experts say that there have been cases where the house has been listed at a price that is less than about 40 to 50 percent of the actual price.
If the bank feels that a short sale offer is less than the fair market value of the property, it may choose to wait and see if it can get a higher price at the auction. Under such circumstances, short sale specialist believes buyers have only two options open: either to pay more or look for another property.
Before buying a short sale property ask the realtor if it’s already approved for the short payoff. If the answer is no then ask whether the realtor plans to mitigate it themselves or would want to delegate the task to a loss mitigation firm. If the realtor takes it upon himself, then you need to give up chasing the property because realtors hardly get a short sale approved.
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