Everyone COULD win on home 'short sale' |
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Wilson, who has represented both buyers and sellers
in short-sale deals, advises working with an agent who's familiar
with short sales. He also suggests that buyers looking to negotiate
a short-sale deal come armed with enough documentation to convince
the lender that settling for the lower price is their best option.
"You'd better be armed with recent comparables
that show unequivocally that the lender's price is out of line,"
says Wilson. "You can't do this with a cover letter or a conversation.
It will need to be done with the kind of documentation that an appraiser
would come up with.
"When you go into a short sale, you have an institutional
lender and it is an anonymous entity," Wilson continues. "You
don't get a chance to talk to these people, you don't know what
their guidelines are, you don't know what their time frames are
and you don't know if your contract will be approved in six weeks
or six months. It's a real crapshoot."
Lenders are most concerned with the financial situations of the seller when they ultimately make their decisions. If a seller can handle the mortgage payment, there's no motivation for the lender to let the seller out of the mortgage at a lower price.
"A lot of lenders aren't even going to consider
a short sale unless it seems like (the homeowner) is in financial
distress," says Lohrenz.
Also, if the home has a second mortgage with another
institution, a short sale is less likely to be approved since that
second institution would have to agree to forfeit all or part of
the money it's owed.
Last gasp only
While getting a lender to agree to a short sale may seem like an answer to the prayers of homeowners who want to unload a house, it's not a good move if you're merely looking to find a new place. It's generally a last-ditch effort when the only other option is foreclosure.
Should you go for a short sale? It depends on how
deep a financial hole you're in and how likely it is you'll be able
to overcome those financial difficulties.
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