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TOP 5 REASONS YOUR SHORT SALE GOT DECLINED AND WHAT TO DO NEXT!
Buyers offer is too low:
If you throw a low ball offer at a short sale, there's a good chance it will get rejected, and you can waste a lot of time to get to that no. For that reason, it is simply not a smart move to accept offers that are well below market value. Sometimes though, a fair offer is rejected, and usually because the lender has an unrealistic valuation of the property.
When the lender considers your short sale they order an evaluation of the value of property, which may come from an appraiser, or a BPO - Broker's Price Opinion. Values may not always be accurate. An experienced CT short sale agent will know just how to dispute this value with the lender and get them to revise it.
The lender will require full financial disclosure to consider your short sale, and all documentation needs to be complete and current.
This is the simplest problem to fix - provide a complete short sale package to begin with, and follow up consistently to make sure documents were received. An experienced short sale realtor will know exactly what the lender needs and will be diligent about follow up. They will also know how to handle documents that simply cannot be provided.
Excessive cash/promissory note demands from the lender:
Sometimes the lender will ask the seller to contribute cash or a promissory note at closing. These demands can be excessive upfront, but are frequently negotiable.
For example, if your lender asks you to contribute $25,000 cash at closing, this is not always a take it or leave it scenario. A quality short sale agent will help you negotiate this down or away altogether. I have seen some outrageous requests from lenders, and I have seen many disappear altogether!
The walk away buyer:
Not all buyers have it in them to wait. Buyers get impatient or sometimes lose their financing, or walk away due to an inspection issue.
Qualifying the buyer upfront is key and there are several ways to do it. Despite best efforts, some sales still die, and you have to start over. The good news is, most times the second (or third) go is easier.
Multiple lien holders that refuse to settle on common terms:
In a perfect world everyone has a single mortgage, however this is often not the case with my short sale sellers. All the lien holders on title must reach a mutually satisfactory agreement for the sale to be successful. The more lien holders you have, the less likely this is to happen. Once you add sewer and water liens, judgement liens, tax liens, etc, on top of a mortgage or two, a sale becomes near impossible.
If you are falling behind with all your creditors and want to attempt a short sale, do so sooner than later, or you risk being forced into foreclosure simply by having too many lien holders. Act before your creditors do, and again - choose the right agent for your short sale. Dealing with multiple lien holders is not for rookies.
There are actually very few instances in which short sales are truly not possible. The key to having your short sale succeed is to take action early, hire the right help, and have the patience to stick through any upcoming bumps in the road.