Short sales are a great way for buyers to get a home at a lower price than the current market rate. If this is your first time looking into short sale homes, you may not understand exactly what is different about them. A short sale is a process that allows a homeowner to avoid foreclosure on their mortgage. It permits an owner who is behind on their mortgage to sell for less than the balance due. It requires the approval of the mortgage company holding the past-due loan, because it absolves the owner of the remaining balance. Unfortunately, they aren't always guaranteed. Here are a couple of common reasons the sale might be refused.

One Party Doesn't Qualify

There are two qualifications to consider when you're dealing with a short sale. First, you have to qualify for a mortgage as the buyer. You'll have to be able to show the current mortgage holder or decision maker that you can qualify for a mortgage on the property. If you can show pre-approval, that will help you secure the sale.

The seller will also have to meet the short sale requirements of their lender in order to be eligible. If the lender has specific standards related to how far past due the mortgage must be to qualify, the seller may not be eligible for a short sale. In most cases, sellers will discuss the short sale possibility with the lender before listing the home, but if they don't, this could cost you the chance to buy.

The Lender Wants A Higher Offer

Some lenders have a specific percentage that they require of a short sale offer before they will accept it. If your offer is less than that percentage of the balance due, the lender will refuse the offer. In cases like that, you can counter with a higher offer if your budget allows for it, or you may be able to negotiate by showing an appraisal that supports the offer you made originally.

The Loan Was Sold

The lender who issued the current mortgage may decide to sell the loan to another servicer. In those cases, the lender won't be authorized to approve the short sale without the approval of the new servicer. As a result, you'll have to pitch the offer to both of them in order for it to be considered. If either the originating lender or the new servicer decide that they don't want to negotiate, the short sale will fail. You may be able to work with a real estate agent, such as Dennis Crecelius - Realtor, and a real estate attorney to help encourage negotiations, though.