A short sale negotiation needs to involve both a real estate agent and negotiation specialist. A specialist is often someone from a legal firm or other third party loss mitigation company.

The reason for this negotiator is that banks are often difficult to deal with. Some people might choose to deal directly with the bank themselves, but in a process as complicated as a short sale, it’s best to enlist professional help.

If you do try to work directly with the bank on your own, be sure to always remain calm and confident. It’s very easy to get frustrated. Banks are very good at telling you no.

One of the most important parts of the short sale negotiation is the package you and your loss mitigation specialist put together for the bank.

Make sure the package includes all the materials the bank has requested. This often includes a hardship letter from the homeowner or owners, estimated value of the property, estimates for any needed repairs of the property, homeowner’s income tax return documents and a borrower’s offer price for selling the property.

After verifying all the documents, the most time consuming part is negotiating the price for the home to be sold. The bank will obviously look for more profit and may not always agree to the price offered by the borrower. This is a critical part for you to have representation. Banks deal with individual homeowners differently and try to get as much out of them as possible. A negotiator is going to have a better idea of what is really possible and should be able to get a fair agreement just about every time.

Short sales are a lengthy process and the negotiation can drive you positively crazy. Let someone else handle it and keep your stress to a minimum.

However, the concepts are still the same. If you don’t make enough money now, at what level will you be able to afford payments in the future?

It’s just that the number crunching is more complex.

One thing that figures prominently into the commercial modification process is a business plan. Your mortgagor is going to want details of how the restructuring is going to prove worthy in the long run.

Just as is the case with an individual, you will have to show the property making enough profit to justify the modification.

The bank will ask for details and will want to see hard evidence that (1) your current situation dictates a change and (2) your future situation makes financial sense for both parties.

Documentation Needed

Again, many commercial documents are similar to those requested in the residential process.

Items such as a hardship letter, authorization forms, and bank and mortgage statements will all be requested.

In breaking down expenses and income, you’ll need to provide rent rolls, operational income, an operating expense statement and short term budget. Business tax returns will also be necessary.

Also, as mentioned above, an updated business plan will be necessary.

A professional firm can represent you and present everything as one, clean package to the lender.

The Waiting Game

With a detailed presentation given to the lender, aggressive negotiations are necessary to keep the lender involved and let them know you mean business.

However, it takes patience. Depending on the lender, it could take months to reach an agreement on a restructured deal.You’ll want to prepare yourself mentally for a drawn out process.

Again, you many want to consider professional help to ensure someone is always on top of your file and keeping the negotiations going strong.

Questions to Think About If Doing a Loan Mod on Your Own

• Are you prepared for the long, drawn-out process? Lenders take upwards of 4 months in many cases and sometimes longer to come to a decision. This is going to require a lot of your valuable time.
• Are you properly representing your financial situation? I’ve personally seen people try this on their own and get turned down because they didn’t do their financials correctly. If you don’t know what the lender is looking for, it is very easy to get rejected on account of a poorly constructed financial worksheet.
• What happens if the lender says no? You might get to the end of the process, put together a good case for yourself and still get turned down. What do you do? No isn’t the final answer and you have to pursue a result to the dying end.
• Do you know how to explain your hardship? Like your financial worksheet, a poorly constructed hardship is a major reason people get declined. You have to craft a convincing letter that is true to your situation and describes why you are struggling to pay your mortgage.
• Can you get around the collections department and others at the lender that don’t have your best interests in mind? A lot of the time, people call up thinking they are getting loan modification help and end up with a collections agent whose primary goal is to get you to pay everything you owe right now. It can be very frustrating. Third party companies have all the inside contacts at your lender and can get right to your loan modification case.
• Are you prepared for a disorganized lender? The submission process itself can be a nightmare if you don’t stay on top of it. It can take a long time for a lender to even assign it to someone and it’s very easy for you to get lost in the shuffle.

If you find the process too difficult and have questions, you can apply on our website.

• Improperly documenting financial situation. You need to consider every potential expense and be up front and honest about your debts and liabilities.
• Trying to do it yourself. This one is easy to avoid. Unless you are clearly comfortable with the process, you’d be wise to pick up the phone and call a loss mitigation specialist.
• Not knowing what to do if the modification fails.There are other programs that offer better alternatives to foreclosure. If loan modification fails, we’ll know what to do next.
• Submitting an incomplete package. Our process ensures you will not miss a step and make critical mistakes.
• Poorly crafted hardship letter. Your hardship letter is an opportunity to explain to the lender why you are experiencing difficulties and can go a long way toward convincing a lender that you are a good candidate for modification.
• Talking to the wrong department. If you call your lender, there’s a good chance you’ll have a hard time connecting with the right department. Often, lenders route delinquent accounts to collections who are only interested in getting your full amount due. These are not the people to talk to and will only frustrate you into thinking you are out of options.

Yesterday: Don’t Walk Away | Today: Short Sale Candidates | Tomorrow: Short Sale Drawbacks

• Home value has dropped. This is a classic short sale trait. The market has dropped off considerable and left thousands of homeowners with a mortgage debt that exceeds their home’s appraised value. It makes refinancing impossible and often times, a short sale is the best option if you just can’t keep the home.
• The mortgage has defaulted or will in the near future. While it’s more common to see a short sale approved when in default status, it’s becoming more common to see lenders approve a short sale earlier in the process to mitigation their future losses.
• The seller has a hardship. You’re much more likely to get approved for a short sale if you have a documented hardship of why you simply can’t afford to stay in the home and make payments. The hardship letter is an important document that should be carefully crafted.
• Simply can’t afford the home. If it’s just not possible to afford the home even with a loan modification, a short sale is the right option. It’s unfortunate if this is the case as no one wants to lose their home, but at least with a short sale, you can limit your credit score damage and responsibly reach an agreement that gets you free and clear of the situation.

If any of the above characteristics fit your situation, you should at least have a conversation with a professional about your options. Time can become a real critical factor and you need to stay ahead of the problem in order to reach the best possible resolution.