A short sale is like a saving grace for many homeowners with financial hardship. It allows you to escape with less of a hit on your credit rating if you are unable to pay your mortgage with less of a hit on your credit rating. However, it is a long and strenuous process. Without proper guidance, it is very possible to make a wrong step. This has the potential to jeopardize the entire process. In cases like this, the bank may not bother reaching out and may deny your short sale request.
If your short sale is denied, it is important to recheck that you qualify for a short sale by your bank. You should look through all requirements that the lender wanted to be submitted. You should ensure that you have satisfied all of these. If you have confirmed yourself to qualify, you can then begin the process again. However, you may need to take some different approaches.
Don’t worry though. As long as there is no major issue with your request, you can apply again. You should have a short sale agent who can find what was wrong with your last request and fix it. If you feel your last one wasn’t prepared well enough, it’s never too late to change agents.
This post will let you know exactly what you should do if your short sale gets turned down.
What Are the Likely Reasons for a Short Sale Being Declined?
A lot of the time, your short sale in Charlotte, NC is denied for avoidable reasons. If not that, it is denied for reasons that can be easily fixed. A good agent can help you avoid these mistakes and get your short sale finalized as quickly as possible.
The following are some of the reasons why a short sale may be declined:
- Your short sale package is missing items. An incomplete short sale package is one of the most avoidable reasons. There are a lot of documents that need to be submitted to your lender for this package. If there is just a single one missing, it is enough to cause your bank to reject the offer. Sometimes, they may reach out to tell you which document wasn’t there. However, this is not always the case. In some cases, the issue may be on the lender’s side. If they end up misplacing your documents, then it can mess up the process.
- You don’t qualify for a short sale. Financial hardship must be proven when applying for a short sale. The lender will want to make sure that the seller is truly unable to pay their mortgage. This is usually done with a hardship letter explaining the situation. They will also want to ensure that there are no assets that can be sold for money. If the lender is not convinced, they may deny the short sale on this account.
- The short sale price is too low. A bank will prefer a foreclosure if it will make them more money. They will usually have an appraiser come to inspect the house to get an idea of its value. Any listing agent should be able to justify the price they have listed the house for. If it is too far off from the appraisal, the lender may decline the offer. After all, they would likely make more money off of a foreclosure. In some cases, the buyer may present too low an offer. In other instances, if the house is in a bad condition, it can make it difficult to sell. A lender may not bother approving if the home looks like it will not sell quickly and close to the asking price.
- The buyer may not qualify to purchase. A buyer may have the financial means to pay the mortgage on the house. However, some factors may give a lender pause. If the buyer has a questionable credit history, then a lender may decide not to give them funding. This can cause a short sale to fall apart.
What to Do If a Short Sale Is Declined?
If a short sale is declined for any of the reasons listed above, it is easy to fix the situation. After all, nothing is stopping you from trying again. The steps below can help lead you to a successful second attempt.
- Enlist the services of a new agent. A short sale agent should be able to guide you through the entire process. They are meant to help avoid the chance of your short sale being declined. While some reasons may spring out of nowhere, you should cover all ground that you can. If you feel like your previous agent was not doing enough, it might be worth it to find yourself a new short sale agent. Most of the things that can cause a declined short sale can be avoided with a good agent.
- Double-check that you are qualified for a short sale. There are some criteria that a lender requires before a short sale is granted. These tend to do with proving financial hardship. These include the following
1. The house was previously paid for by a married couple. A divorce now prevents one member from affording the house alone.
2. There has been a medical situation that caused a large financial drain. This can also include a death in the family which had a similar impact.
3. The individual is currently unemployed. In these cases, there must be little chance of employment any time soon.
4. The homeowner has declared bankruptcy.
- Resubmit your short sale package. In the case where some items of documentation were missing, you can resubmit. Look carefully through the requirements and ensure that everything is present. With a good agent by your side, you can make sure this is done right.
- Ensure that your hardship letter is well written. If you wrote your hardship letter without any help, you may have left out key details. Your reasons must be well outlined. The letter may not be read in full, so you should get to the point quickly and make it clear.
Even if your Charlotte, NC short sale was declined, there is a lot that you can do. Nothing is stopping you from reapplying. However, you must get everything right on your second try. A short sale agent in Charlotte, NC can help you with this.
Don’t get trapped by an agent who doesn’t put their all into your short sale. Nancy Braun is a top real estate agent in Charlotte, NC. Showcase Realty has the experience in negotiating short sales and getting them approved. If you want a short sale that will be effectively done, then she’s the one for you. Call Nancy Braun at 704-997-3794 to get started.