The Mortgage Lender's "Short Sale" FactorsThe seller's mortgage lender will be considering many factors in deciding whether to approve a short sale, including: - Whether the seller is deserving of a break, due to financial hardship caused by unforeseen circumstances such as layoffs, divorce or illness
- Whether it would be cheaper to simply repossess the house, make any necessary repairs and sell it through a real estate agent
- How many other properties the mortgage lender currently has in default
- Whether there are co-signors who can be held responsible for the balance owed on the mortgage
The Short Sale Process Your chances of success with the seller's mortgage lender improve if your communication with them is organized and complete. Your first contact with the seller's mortgage lender's "loss mitigation department" is crucial in making a good impression. You'll want to send them what's called a "Release" or "Authorization to Release Information" already signed by the seller, which allows the mortgage lender to talk with you about the seller's mortgage. You should talk with the listing real estate agent or the mortgage lender's loss mitigator, to find out what information they will need to complete the process. Loss mitigators sometimes receive bonuses based on how many defaulted loans they can clear up, so they're more likely to pay attention to your sale if you can show them you're taking care of as many details and objections as possible. It will be necessary to be specific about the seller's financial difficulties with what's called a "hardship letter." The mortgage lender may also require pay stubs, copies of medical bills, checking account statements and other appropriate evidence from the seller. The seller's mortgage lender will look at the seller's credit reports to verify the seller's financial predicament. This will all take extra time. Broker's Price Opinion The mortgage lender will order what's called a "broker's price opinion," which gives the mortgage lender some idea of what the property is actually worth in the current market. A broker's price opinion will be based on: - the value of comparable properties in the same neighborhood
- the general condition of the neighborhood
- the condition of the specific property in relation to neighboring houses
Settlement Statement Scrutiny The seller's mortgage lender will want to have an advance look at what's called the " Settlement Statement" or "Settlement/Disbursement Estimate." The mortgage lender will be carefully reviewing: - Commissions going to real estate brokers
- Where your financing is coming from (Cash? A loan?)
- Payments to cover outstanding liens and taxes
- Approximate date of the closing
- Any cash to the seller (a definite no-no)
- Any other expenses which may raise a red flag
While buying a home on a short sale can be frustrating and time consuming, your hard work can pay off in a home that's worth considerably more than you paid for it. | 
Each property has it's own situation. While one may provide a great opportunity, another may not in the same development. It depends on many factors. Who their mortgage is with, what kind of hardship exists, how much equity the owner has, etc. 