Step 5: Negotiation of Short Sale
When submitting a short sale package, a borrower needs to realize that the lender's decision is going to be entirely based on financial factors. As heart wrenching as a borrower's circumstances may be, approval won't be given unless it makes financial sense for a lender. It is quite telling that a bank or lender's loss mitigation department is typically in charge of assessing short sale packages - they approve or deny them based on whether or not the short sale will mitigate their own financial losses. In other words, the lender has to weigh the financial pros and cons of a foreclosure versus a short sale. If the short sale means that they will lose less money, they're more likely to approve it.
Throughout the short sale process, it is critical for the borrower to communicate regularly with the lender. The borrower should make it easy for the lender to get in touch with him, in case any questions arise. Once the short sale package is submitted, lenders usually have additional questions for borrowers. When a lender can quickly and easily contact the borrower with such questions, his case is bolstered. Evasive, hard-to-reach borrowers generally have less success than forthcoming, easy-to-contact borrowers.
Savvy borrowers will make copies of everything that they've sent along in their short sale packages and a communication log of all contact with the lender. That way, they will be prepared to address any questions or concerns that a lender may have concerning their case. Even if an attorney or another representative has taken the reins, it is very important that the borrower is well-versed in the details of his specific case. Most of the time, banks and lenders insist on speaking to the actual holder of the loan. If a borrower is unprepared to answer questions during the short sale negotiation phase, the entire deal could fall through.
By quickly and competently answering any questions that a lender has, a borrower increases his odds of being approved for a short sale. During the negotiation phase, a lender may produce additional information that they have obtained through outside parties; BPOs, or Broker Price Opinions, are popular examples. As long as the borrower has provided clear, factual documentation - and knows the ins and outs of his specific situation - the negotiation phase should go off without a hitch.
Next: Closing the Short Sale