Q&A: Can the bank deny a short sale offer even though its more that what is owed?

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  3. Q&A: Can the bank deny a short sale offer even though its more that what is owed?

Answer:

This depends on the circumstance.

1) Offer is Greater than what is owed but after all fees are paid, the net balance is less than the full payoff amount. In this case, although rare, the bank could deny the short sale.

e.g. Purchase Price $500,000
Loan Balance $ 480,000
Commissions $30,000
Other Closing Costs: $4,000
Balance to Seller $-14,000
In this case, the seller would need to decide if they are willing to pay 14,000 to get out from under the house or they would need to convince the bank to accept the short sale.

2) If the offer made is greater than the loan balance and after paying all closing costs there is a balance left over for the seller, than the property wouldn’t be considered a short sale. At this point it would be up to the seller entirely whether or not they would accept the offer.

e.g. Purchase Price $500,000
Loan Balance $ 450,000
Commissions $30,000
Other Closing Costs: $4,000
Balance to Seller $16,000

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