First, you probably owe them a lot of money. They may have been losing money on the original short sale. But, now they lost another $50,000. They will probably ask you to repay them for their loss. Many people are shocked to learn that they are stuck owing tens of thousands of dollars to their bank. A short sale can help reduce the amount you owe. I'll explain how.
First, most short sales result in the bank forgiving you on the debt. We have seen banks lose hundreds of thousands of dollars and still forgive the debt. I estimate that over 80 percent of short sales result in the homeowner result in the debt being forgiven. Contrast this with a foreclosure. In most cases, the bank can chase you down for the money for seven to 20 years.
Here is the second way that a short sale can reduce the amount you owe. Most short sales result in the bank result in reduced losses to the bank. I'm sure you are wondering why. First off, the home usually sells for more money as a short sale than it would as a foreclosure. We have seen $385,000 short sale offers get turned down, only to result in the home selling after foreclosure for $230,000. That's a huge loss. Second, a short sale costs the bank less money in property taxes, homeowner's insurance, lost interest income, etc. Overall, the costs are much less. All these costs add up fast.