Kim,

The sad truth about short sale vs foreclosure is the lender may have had mortgage insurance and stand to lose absolutely nothing by waiting for the foreclosure period. Chances are that this particular property was mortgaged to around 225K so the lender would need to take at least a 50k paper loss with a short sale. If the insurance will pay back the 225K and the lender will receive the property back then the lender would only gain by waiting for foreclosure. You can thank our bailout government for allowing banks to operate without holding back reserves on the defaulted loans.

Kim,

You are best to leave this matter in the hands of the Agent representing your sister.

So you know, banks look at short sales as the least amount to loose than gain. If the agent who listed the home is experienced with short sales than that agent is the person who will make the deal happen.

From the time the short sale offer is made, typically the close date is 2-6 months from the time the offer was presented. This is because the listing agent is dealing with negotiators trained to look for more money and prolong the time line which may bring forth more money for the bank.

As an experienced agent on both sides of short sales, I would tell you that he or she who lasts the longest usually wins.

Best of luck to her and honestly, try not to advise your sister on things you read and ask here. It may cause more problems that it solves.

Sincerely,

Stew Keene
Home Smart Realty
Phoenix, AZ

Good answer by John. Also, the amount short is not calculated based on prior sale price. It is based on the outstanding loan amount minus the current value. The loan value may have changed since it was purchased due to principal pay down or refinancing.

The buyers agent has very little to do with how quickly a short sale will get resolved. The listing agent has a good deal to do with how the process moves along. It is very doubtful that an offer just made on a short sale will close in just 2 weeks. Even if the bank had already pre-approved the SS that is truly very quick.

As for is it better for a bank to approve a short sale vs going to foreclosure it find of depends. There are a lot of factors involved, not the least of which is the worthiness (hardship) of the person who currently owns the home.