Can a seller really walk away with money from a short sale?  You wouldn’t think so, since the bank is taking a loss when they agree to a short sale.  The seller logically would not get a single dollar upon the sale if he is asking the bank to take a $20,000 loss or a $70,000 loss or a $200,000 loss.  But guess what?  Truth really is stranger than fiction.  Here’s how it works.

Walk Away With Money From a Short Sale

Banks are all about money.  At least you would think so.  Sometimes that is true.  Sometimes it’s not true.  For example, banks will often reject a good offer and suffer a severe loss after they foreclose a year later.  For example, in one case a bank refused a decent offer in which they would have lost $15,000, but they rejected it, went through a lengthy foreclosure, and a year later sold the home for a $75,000 loss.  If they were all about money, they wouldn’t make decisions that lose so much money.

But there’s a flip side to the coin, and it does focus on making money with decisions that don’t necessarily seem logical, but in unusual twist of events may end up being the more profitable decision for a bank.  Such is this scenario where a seller may walk away with money from a short sale.

Walk Away With Money From a Short Sale as Seller

Some sellers are getting paid out of the sale proceeds to cover their moving expenses, like $10,000 or $20,000 or more.  Apparently, someone at the banks figured out that they can make more money, or sustain smaller losses, if they pay the seller to move after the short sale closes.  This doesn’t mean they will agree to this in every short sale.  On the contrary, it is rare, but it is happening.  Who would ever have guessed that a seller could walk away with money from a short sale!

Walk Away With Money from a Short Sale as a Tenant

What if there is a tenant in the home, and the mortgage payments are in default by two months, and the seller wants to sell the home as a short sale?  Can a tenant get money to move from the bank via the sale proceeds?  This is happening too.  Again banks are thinking about what it might take to go through the foreclosure process, which takes almost a year, not receiving any payments during that time, and all the while there is a tenant living in the home.  Once the foreclosure is complete at the Trustee’s Sale, there is still a tenant in the home.  It would then take an unlawful detainer action (an eviction) to get the tenant out, and that could take months.  It might be cheaper to just give the tenant money to move.  Does $20,000 sound good?  This is how a tenant can walk away with money on a short sale.

Truth is stranger than fiction, and today one of those truths is that a seller or a tenant might just walk away with money from a short sale.

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