How to Get Bank Approval on a Short Sale

A short sale refers to the selling of a home when the price does not cover the amount the seller owes on the home. The amount owed can be from mortgage costs, property taxes or real estate commission. This happens when a seller is unable or unwilling to cover the difference. There are some ways you can make a short sale more attractive to a bank and increase the likelihood that the bank will approve it.

Instructions

1. Gather tax information, bank statements and documents showing debt and income from the seller. This information should be submitted with a hardship letter showing why the seller cannot pay the full loan amount. Sellers with the income or assets to pay the loan are not likely to be considered for approval.

2. Submit to the lender a real estate appraisal or opinion for the value of the home. Short sales should be priced at or near fair market value and most banks will only accept values from 8 to 20 percent under market value.

3. Crunch the numbers and show the bank how they will benefit from the short sale financially. A 2002 study by Craig Focardi of the Tower Group said that the entire cost of a foreclosure was $58,759 and took 18 months. This is time that during a short sale banks can save money and actually make money from the sale. A buyer who can close quickly and make a substantial down payment can make the deal more attractive to banks.

References

• Realtor.org: How to Succeed at Short Sales