Can't find a fresh question to answer Jon? This one is almost nine months old... ;)

The original loan amount has no bearing on the sale. The bank is interested in two things, 1) the offer, 2) fair market value. If you nail it on the head, and you're the only one in the running, and the listing agent only submits one offer to the lender, then you're probably going to get it.

Your real estate agent should be savvy enough to work with the listing agent to determine if it's even worth your agent's and your time to bother with it. If the listing agent hasn't priced it right, and your agent doesn't know what market value should be, then you'll miss the mark and it will result in a counter offer from the bank.

The goal of the listing agent is to advise his/her client to accept a contract that everyone agrees will make it through the bank on the first try.

The discount thresholds that banks use in determining their required net in a Short Sale is based on the current market value of the property and the type of loan that is being shorted. As a general rule of thumb lenders will accept a net of 85-92% of current market value if it is a conventional loan. 82% if it is FHA insured loan and around 88-91% if its a VA guaranteed loan. Keep in mind that real estate commissions and closing costs have to be added back to that.

If the listing agent has experience chances of a short sale closing are actually pretty good. Unfortunately, in my experience it happens a lot that buyer's agents are steering buyers away from Short Sale listings because of the long approval process (usually anywhere from 45 to 60 days) and the uncertainties whether the transaction will get approved or not. In some cases this could be a disservice to buyers, especially if the buyers are not time pressed to purchase a home. Many times, short sale listings are better maintained because the sellers still have sense of responsibility and with to cooperate with their debtors to avoid foreclosure.

Just to give you an idea on what kind of spreads banks are shorting: I just got a short sale approved where the bank accepted a sale price of $220,000 on a property which was mortgaged to $316,000 in 2005. This is over $109,200.00 loss to the bank.

No, short sales are not a slam-dunk by all means, however banks have gotten wiser and if the property is priced correctly and the agents involved have a clue what they are doing then you have a good shot closing it.

Christoph K. Schweiger
Associate Broker
Homesmart
602-325-3415

Lenders base their prices on bank owned and short sales strickly on appraised market value. Generally though they come back on the market cheaper once bank owned, than as a short sale.

Janie,
The original loan amount is not a factor,
Every short sale is diffent, Listing agent has to be on top of things . I have seen seller getting a short sale apprasal and put very nice package (fact, home for sale, inventory on hand, asking price, etc by the listing agent) The listing agent has to be very proactive, there is no garantees that it will close, however banks are now willing to take short sale instead of foreclosure. Short sales have always been part of real estate, except that right now, most home are on short sales, or foreclosure. Don't be afraid. Most people rather buy a short sale: seller still cares about condition of the home, than a foreclosure home: who knows what you buy.
Banks want to sell their properties even if it a short sale, some times is miscommunication and perserverance.
Good look talk to your realtor, if she/he need the package let me know. She/he just has to modify it accordingly.

Marina Kocian
480-329-8113

From my experience, loss mitigation departments have a complex formula that is based on a myriad of factors such as planetary alignment, the day of the week, and the lunar cycle.

I suspect they even use random number generators.

In other words, it's a crap shoot.

We just had a home a short sale buyer had an offer on go into foreclosure. The bank listed it at $40K **less** than the short sale offer.

I linked below to an article I *just* published on buying short sales vs. lender owned. If it weren't so pathetic, it'd almost be funny.

No specific answers as the final bank price is determined by the "negotiator" for the bank and if there is a first and a second loan with different lenders - you'll never get a firm answer.

If you get lucky, expect to pay 70% of the appraisal price..

John Lynch
jlynch@fineprop.com
RE/MAX Fine Properties