So we owe 260,000 on our morgage and had to move out of state for work. We are trying to sell as a short sale. (239,000 is what it's on the market for)
So here's my question. What is the likelyhood that the bank is going to approve a short sale if we have never been late on a payment? I'm not sure if that will affect it or not.

From what I understand, short sales are on a case by case basis and therefore cannot make a blanket statement about success rates. A couple of questions do come to mind though: 1) Can you afford the difference (ie $21k)? 2) Can you show hardship?

I think if you can afford it (and the bank knows this?) or you cannot show hardship, the bank will not do a short sale. However, if you've had changes in your life (ie you said you moved), you might be able to prove to that bank that they are better off taking the $21k loss.

Buyers tend to stay away from short sales because of the long process that is usually involved. Banks are slow to move their feet and the buyer has to be willing to wait for them to decide. The buyer could wait months and the bank could come back and say no (I've seen that before and it does not make for a happy buyer or good experience for any party involved.)

My advice is to use an attorney and a good broker. They can address personal questions and work you through the process. Good luck!

As Sabunabu posted, short sales are on a case by case basis.

This is because the lender does not have the same incentive to do a short sale than any other workout option. Many lenders and investors may not even permit short sales. If they do, however, they can be done. The first step is finding out the requirements of your lender in submitting a proposal. Most lenders require a hardship letter explaining why you are requesting a short sale. Your husbands job and relocation should be sufficient as long as you can show that you cannot afford both mortgage payments.

You will need to put together a realistic worksheet outlining your monthly expenses. Be as detailed as possible. You need to show the lender you cannot afford both mortages.

You will need a purchase agreement from an already qualified buyer or your lender will not even consider your offer. This part is tricky because again, the lender can take a long time and the buyer may not want to hang around. Make sure you keep your buyer happy and add any incentives to the sale agreement that you can to ensure they are willing to wait it out.

Follow up - this is key. Once you have gathered all of the documents your lender requires and you submit your proposal to your lender, do not wait. Call them at least twice a week to see how things are going. If you are working with a real estate agent make sure they are specialized in short sales. Most agents (no matter what they say) are not. Short sales are very trying and need lots of TLC to push through.

All f the suggestions stated are good..
if you have remained current on paying your mortage.. it is possible that your credit could return to a decent score as early as 18 months after the short sale closes.
It is when folks default on the loan and than do a short, that their credit gets dinged badly...

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