LENDER’S KEY FACTORS TO DETERMINE SHORT SALE
In
determining whether to approve a short sale for your home in foreclosure,
lenders usually consider several key factors. Followings are those key factors
whether your short sale will be accepted or rejected.
1. The
conditions of your property.
a. Is the home in
bad shape?
b. Is the home wired?
c. Is the home in bad neighborhood?
If
you home is in bad shape and needs a lot of money to repair, or your home has
wired design or functionality, or it is located in a bad neighborhood, or for
whatever reasons that cause your home hard to sell or make them think the
property is a headache to take back, then they are more likely to agree for a
short sale at bigger discount.
2. Your
capability to pay the mortgage payment.
If
you can prove to your lender or lenders that you can no longer afford this home
because you lost your job, sickness or disability, or lost business or whatever
hardship, then lenders are more likely to agree to a short sale.
3. Your
efforts to try to make the loan current and the efforts to try to sell your
home.
Lenders
will also look at what efforts you have make to sell your home or try to make
your loan current. If you have done this, that will help them to make their
decision easier to accept a short sale.
4. Property
value vs. the loan balance.
If
your home does not have any equity or very little equity and only has one
mortgage on it, then lenders are more likely to agree to a short sale.
If
your home has a lot of equity, especially 30% or more than the property value,
then lenders are less likely to agree to a short sale and may completely not to
consider a short sale at all.
If
your home has no equity, but has more than one mortgage (i.e. one or more
junior liens) on it, then the senior lien holder (first mortgage lender) is
less likely to agree to a short sale and may completely not to consider a short
sale at all because they can foreclose your home and wipe out all the junior
liens.
5. How much
is the buyer’s maximum off.
If
the net sale price from buyer’s maximum offer meets lender’s bottom line or is
better than than. Lenders will definitely approve the short sale. A net
sale price is the one after deducting all the sale costs including commissions,
legal fees, and any other costs related to the sale. This is the most important
factor whether your lenders accept or reject your short sale.
The
bottom line for the lenders is whether they can get more money back by doing a
short sale than foreclosing your home.
To list your home FREE for a short sale, please fill out this form and I let us discuss the details.