Mother & Daughter Blog: The trials of a short sale!

I have recently been working with a client in a short sale for her home.  She has not been behind in payments up to this point, but she has not been able to get any offers on her home at a price that would cover her debt.  We listed it for 4 months at a price that was fairly reasonable, but as the market started to decline it was above the short sales and foreclosures we were competing against.  We had the house staged by a kind realtor toward the end of that time frame and it was neat as a pin.  No offers!  So we relisted it and dropped the price to compete with the "market".  This meant a short sale for my client.  She was prepared to do this as she has had a hardship of caring for her elderly parents and shouldering much of their debt.  She also lost her co financial supported with the house bills.  After a short time we received an offer for the house.  I submitted it to the bank and after quite a bit of confusion I heard back from them.  By this time 2-3 weeks had past and the buyers was growing restless.  The bank turned down the short sale request and said the only option for my client was a deed in lieu.  Why was this I wonder?  Is it because she is not behind in payments or was the hardship not good enough?  I am not sure, but my client is now at a place that she cannot make the payments!  She was only short a few thousand with her first and short completely with her second with the offer.  They could have countered to cover the first, but they turned her down completely.   We had hoped that the offer would cover the first and she would deal with the second.  I wonder if it is because it is better for the bank to let a house go into foreclosure even though this is much worse for the seller.  The bank stands to have more tax advantages I hear if the house is foreclosed on rather than a short sale.  Even though there are lawyer fees and it is long a drawn out. 

My client has opted to keep the house on the market and hope for an offer that covers her first completely and only shorts the second.  She really doesn't want to deal with bankruptcy or foreclosure.   Short sales are a lot of work for all involved, but I believe they are a good option for a seller in financial trouble.  So we will persevere and try to get her house sold soon! If you would like to take a look at the house it is at 4594 Koln Lane, Salem, OR  and listed for $159,900.