Chicago Short Sales: Why Banks Reject Short Sales And What We Do About It!

Posted on October 7th, 2010 in All Articles, Short Selling/Buying.

Chicago IL – Banks reject short sale offers for a number of reasons. The biggest reason is because they feel the property is worth X and the price is below that number.

For example, you might have a buyer willing to pay $119,000 for a short sale. The bank orders an appraisal.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

The appraisal comes back at $135,000. Usually the bank will turn down the offer and ask the buyer to increase their offer. Often times the buyer will agree to pay the higher price.

Here is another reason short sale offers get turned down: The lender doesn’t have a complete short sale package. Maybe the seller’s last 2 bank statements are missing.

Or, a page is missing from the sales contract. In that case, the necessary paperwork will be sent to the lender.

Reason #3: The offer doesn’t meet the short sale guidelines. Every lender has different guidelines for whether they will accept or reject a short sale.

For example, the owner of the loan might be Fannie Mae. Fannie Mae has specific short sale guidelines. Unless the short sale offer meets those guidelines, it will be rejected.

Reason #4: Unrealistic expectations from the lender. Every lender has a specific employee who negotiates and processes the short sales. That employee is called a short sale negotiator.

This employee has a lot of discretion over what they will and will not approve. We have seen those employees make up their own guidelines.

They decide that Fannie Mae’s short sale guidelines aren’t good enough. So they demand more money from the buyer. Or they want the seller to give up their entire life’s savings.

If the seller or buyer do not agree, then they will turn down the short sale offer. Never mind that they do not own the loan. If the short sale is turned down then the owner of the loan, Fannie Mae, risks losing even more money.

Most short sales that are foreclosed upon end up selling as a bank owned property. The Boston Consulting Group recently did a study on short sales. They studied what a lender would net when selling a home either as a short sale or a bank owned property.

They discovered that banks lose twice as much money on bank owned sales versus what they lose on short sales. What should your agent do with a short sale negotiator at the bank who doesn’t follow the short sale guidelines?

We gently remind them of the loan owner’s guidelines. They usually approve the file. If that doesn’t work, then we will notify their supervisor or someone higher up at the bank.

That solves the problem most of the time. But, if it doesn’t, then we contact the owner of the loan directly and let them know what is happening. That is the basis of what we do to get your short sale approved and help you move on with your life.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at myrealtorphil@gmail.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (312) 953-6725.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Remember to visit my Chicago short sale blog frequently for great tips and information on short selling in Chicago www.Chicago-ShortSaleBlog.com

Thinking about a loan modification? Our Chicago Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Phil Buoscio.

Phone: (312) 953-6725. myrealtorphil@gmail.com.

Looking to buy or sell in Chicago?  Check out my Chicago blog at www.BetterLivingRealty.com

Phil Buoscio, is a broker with Better Living Realty he leads the sales team “Phil Buoscio Team” and specializes in short sales in Chicago Illinois. Chicago Loan Modification Help can be referred to you. We don’t do loan modifications ourselves but we work with those who do.

We know Chicago Short Sales. I am a Chicago Short Sale Realtor. Chicagoland Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor. We do business in Pilsen. McKinley Park. Bridgeport. Wicker Park. West Town. Ukranian Village. Lincoln Park. Near North. River North. East Village. Logan Square. Uptown. Edison Park. Portage Park. Hermosa. Lincoln Park, South Loop, West Loop. Bronzeville. Hyde Park. Kenwood. Oak Park. Brookfield. Cicero. Berwyn. Evanston. LaGrange. LaGrange Park. Riverside. We sell condos, single family homes, lots, land, multi units, two flats, three flats, etc.