Regardless each bidder’s financial condition (down payment amount/ excellent credit score/ contengencies…)?
For example:
Bank’s target price is $350K. Two offers received from two possible buyers.

Buyer A: Offer $352K, 5% down, credit score good 750.

Buyer B: Offer $350K, 20% down, credit score Excellent 803.

Which one would be in favor of by the bank?

Short sales homes can be a saving grace for borrowers facing foreclosure. The process involves selling the property short of what is owed on the mortgage note. When borrowers become delinquent with their payments and do not possess the financial means to become current, some lenders will grant short sale approval to prevent the property from falling into foreclosure.

Short sales homes are sold below the appraised value and proceeds are used to satisfy the debt. Obtaining short sale approval requires borrowers to undergo a financial audit through their mortgage lender and locate a qualified buyer to purchase the property.

Borrowers must work with an assigned loss mitigator. This individual is generally employed by the bank to develop a plan to either cure mortgage arrearages and help borrowers become current with payments, or short sell the property within a specific timeframe.

Not all mortgage lenders offer short sales, nor do all homeowners or properties qualify for approval. Those who do offer the option of short selling handle the process according to their established protocol.

Unfortunately, there is no one-size-fits-all strategy for negotiating with lenders to obtain short sale approval. However, borrowers who have accrued equity in their property or those who own valuable assets which could be used to repay the note cannot apply for mortgage short sales. The only way to know if properties qualify for short sale approval is to contact their lender.

Short sales are usually handled through the bank’s loss mitigation department. When borrowers become delinquent on their mortgage loan their account is turned over to a loss mitigator. This person acts as a mediator between the borrower and lender. Mitigators do not make final decisions, but can offer guidance and advice throughout the process.

The first step of the short sale process involves submitting a packet of financial documents. Similar to an IRS audit, loss mitigators carefully review borrowers’ financial status to determine if they are financially insolvent or possess assets which could be used to repay the loan.

Borrowers are usually required to submit payroll documentation, previous years’ tax returns, list of income and expenses, property tax and homeowners’ insurance premiums, credit card and banking statements, and various other documents.

Many mortgage lenders require borrowers to have a buyer in place before discussing the option of short selling property. If so, a copy of the sales contract must be provided to the lender. Other banks allow borrowers time to list their property through a realtor and grant two to three months to locate a buyer. The borrower must then submit a copy of the listing agreement to the bank. If a buyer cannot be located by the deadline, lenders commence with foreclosure proceedings.

If you are facing foreclosure and need to sell your house quickly to satisfy a short sale agreement, consider seeking out private real estate investors. Many investors are attracted to distressed properties because they are sold below market value and make good investment properties; particularly for investors who engage in house flipping.

Many investors buy homes with cash in order to expedite the deal and increase their power of negotiation. Locating an investor who purchases properties with cash can improve borrowers’ chance of obtaining short sale approval.

Borrowers should take time to become educated about the process of short selling their home and weigh the pros of cons of this decision. As they say, knowledge is power. The more you know, the better your chances of obtaining a successful outcome.

If you’re thinking of getting a short sale done for your in-trouble home to avoid a foreclosure, you should know that a bank is not obligated to sell your house. When a bank or lending institution decides to do a short sale, they have to basically eat the difference between the amount of the loan you owe and the proceeds from the escrow, which will necessarily be less. They don’t like doing this. A potential buyer can go through all of the rigamaroll of paperwork to pay for inspections, make an offer, put down the deposit, and get the sale process started. But as soon as they make an offer, the bank might then go ahead and attempt to convince you that you aught to refinance your home loan and stay in your house, so that the bank can avoid having to eat the discrepancy between selling price and what you.

But, a short sale contract in and of itself includes a stipulation by which a bank must approve the sale. A seller can get their money back in you are persuaded to refinance instead of making the short sale. The problem with this is that it ties up months of the buyer’s time and money, and the buyer has to basically start all over again. So any buyer that needs to get a house in a specific neighborhood or has time pressures may be inclined to go for a foreclosure house instead.

Buyers will look for clues in a short sale to help assure then that the bank (or you) are not going to pull out at the last minute. If you’ve moved out of the house, a seller will be much more likely to want to buy form you, because that suggests that you will not be swayed to try to refinance your house instead of selling it in a short sale. If you’re concerned that buyers aren’t making offers, consider moving out of the house or making efforts to make it look as if you are currently in the process of doing so, and you may have much more luck.

Another thing is to make sure your listing has the stamp of approval: “Bank Approved Short Sale”, which signals to potential buyers that the bank has approved the short sale, and only one need do so, so that the buyer knows your insurer or other parties aren’t involved and won’t tie up the process.