A. Stopped making payments on your mortgage
B. The home is still in your possession and
C. You are experiencing a financial hardship

Instructions

• STEP 1: Verify the real and current market value of your property. If you are selling the property through a real estate broker, your broker will provide you with an estimate of market value. In case your property is for sale by owner and on the market over a month without any written offer, your property is more than likely overpriced.
   

• STEP 2: Once you have a written offer, add up all the costs of selling the property. If you are using a professional real estate service, the broker or title agency will provide an estimate of closing costs (HUD1).
   

• STEP 3: In case you end up owing in the transaction you start the short sale process by contacting your lender. If you are using the assistance of an experienced broker let him or her handle the negotiation. In most cases the lender will end up paying their commission as well.
   

• STEP 4: Ask the lender what its procedures are for a short sale. Many lenders are willing to work with you by reducing the amount owed or making other arrangements in order to avoid foreclosure. A foreclosure is not only painful to the borrower but also to the bank or lending institutions since the process is very lengthy and involves many additional costs.
   

• STEP 5: Most bank's will require that you list the property in the market in order to proof any reduction. The lender will look to the agents involved or anyone else who's making money off the transaction to see if they are willing to make concessions to bring the transaction to a successful closing.
   

• STEP 6: Once approved by the lender - sell the property and close.
   

Tips & Warnings

• You will have to prove and explain personal hardship to the bank in order to process a Short-Sale.

• You will not be allowed to receive any funds at the closing nor will you owe any large amounts.

• The assistance of a professional realtor is required by all banks in order for them to process the short sale: The property must be publicly for sale (MLS). This will show the real market value and substantiate the negotiation of a reduction.

• Most seller-associated closing costs (including Realtor's commission) can be negotiated with the lender.
  
  IMPORTANT:

• A Short Sale can take anywhere from one to six months and always requires lender's approval.

• The IRS often gets involved with short sales, because the lender can report the sale as a relief of debt. Check with your accountant regarding the reduction of debt. Congress is currently working on changing this law for consumers so that lenders will not go after the deficiencies after closing.

If this looks like it will work for you, contact Edward Lucier for a free telephone interview.