Pre-Foreclosure Short Sale Question

[Alice Foster]

I'm a realtor dealing with pre-foreclosure and wondering if it's possible to make this work as a short sale. Scenario (changed the numbers slightly to keep it simple):

Seller owes 200k to bank. Liens and judgments for 20k. Offer at 215k with 3% commission 

I assume the mortgage must be paid before any liens or judgments if the owner sells before they go into foreclosure. So if we have an offer for over what he owes the bank, is it even possible to negotiate a short sale to take into account the liens and judgments? Basically offering them 7% under what he owes? Or will they let it go to auction before considering that.. 

[Account Closed]

Quote from @Alice Foster:

I'm a realtor dealing with pre-foreclosure and wondering if it's possible to make this work as a short sale. Scenario (changed the numbers slightly to keep it simple):

Seller owes 200k to bank. Liens and judgments for 20k. Offer at 215k with 3% commission 

I assume the mortgage must be paid before any liens or judgments if the owner sells before they go into foreclosure. So if we have an offer for over what he owes the bank, is it even possible to negotiate a short sale to take into account the liens and judgments? Basically offering them 7% under what he owes? Or will they let it go to auction before considering that.. 

If you get an offer over the amount owed to the bank, the bank will want full payment and will not do a short sale. They don't care about other liens and judgments. 

Short Sales & Auctions are state specific. How a bank will react is specific to that property and the history of the property. The type of loan will affect the bank's decisions. If it is toward the end of the quarter when loss sheets are due, it will affect their decision. If it is the only property in their portfolio that is in distress or, if they have a bunch of distressed properties it will affect their decision, if the decision maker is new to the position it will affect the decision and if a butterfly flaps it's wings in the Imperial city it will affect their decision. There are so many factors  involved, the only way to find out is to make the offer.