There are times when you should not do a short sale, or you need to do it carefully. If the seller has a home equity line of credit, it may be the only lifeline available to the family. If the seller can still withdraw any substantial amount of money from that line of credit, it may be the only thing keeping the family afloat while they look for another source of income. If you are not careful, you could ruin their chances for recovery.
Some Realtors submit the financial information to the lender early in the process, to see if the seller qualifies for a short sale. The seller’s financial information can be fed into a computerized review system to see if the seller qualifies for a short sale. In some situations, the loss mitigation department will review the financial situation before you have an offer and determine that the seller qualifies for a short sale. This can shorten the review process once an offer is presented.
The last thing you want to do is to give the home equity lender a financial statement showing that the borrower no longer is able to qualify for the home equity line of credit. So, if you are going to do the short sale, you have to time it right.
For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/dont-take-away-the-owners-lifeline/.