Why banks short sale?

Some banks are not satisfied with seeing the homeowner in distress and having to go through the foreclosure process. Many banks will work with the home buyer, real estate investor, or the homeowner to come up with a compromise of how to best cut their losses. However, some banks think that they can sell the homes on the market better than what they will get from a mortgage short sale. These banks would prefer to tie up their reserves and pay for the foreclosure process instead of cutting their losses upfront. These banks need more convincing and the following reasons of why banks short sale should convince them some.

Repair cost

Sometimes the cost of repairs can play a major part in whether banks accept the mortgage short sale or not. Most banks have offices far away. They decide on the value of a particular home by looking at comps and evaluating the situation without seeing it. They cannot tell the condition of the house or how much repairs are needed before they can sell the house for a decent value.

In this case, it is up to the real estate investor wanting to short sale the bank to convince them that the short sale price offered is reasonable when factoring in the repair costs to the equation.

The house won't sell for as much as they think

There are many factors you can throw at the bank to prove that the property won't sell for as much as they think it will. For a start, a home that is appraised for a value, say $500,000, may only sell for $400,000 because so many houses are on sale in the same area. Some of those other houses may be even more attractive in style and will sell before this property would.

Moreover, there could be something happening in the neighborhood to bring the value of the houses down. For example, if a nearly school is shut down, the properties in the areas may be depreciating. It is up to the real estate investor to convince the bank that this property will not sell as much as they think it would. This is also an opportunity to justify the offering price of the short sale.