Keep in mind that there are additional situations lenders will consider.

A short sale is not right for you if you just made a bad investment. Lenders look for a legitimate financial hardship that will keep you from making the payments. A short sale is not just an easy way out of an unfortunate purchase decision. If your house has just lost some value and you are now "upside down" on your mortgage, that is just unfortunately a bad investment and you are responsible to pay the shortfall if you choose to sell.

Feel free to contact Ezra today to determine if you qualify for a short sale.

Unfortunately, it is not accurate to rely on your own knowledge of what has sold in your neighborhood in order to determine the current value of your property. You need someone who is licensed in real estate to retrieve the most accurate data on recent sales in your neighborhood from the Multiple Listing Service.

Ezra recommends using at least 3-5 comparables that have sold in the past 6 months in order to get the most accurate value. An accurate value is crucial in deciding what course of action to take with your home.If you are comparing your property to less than 3 others that have sold more than 6 months ago, that does not give an realistic picture to base important decisions on.

You can contact Ezra and he'll be happy to give you an up to date home estimate.

After working years with lenders, Ezra cannot in good conscience recommend a loan modification in comparison of the benefits that a short sale offers. A recent study released by the US Department of the Treasury found that 55% of homeowners who obtained loan modifications defaulted again within six months.This just demonstrates that while modifications are possible, they simply don't do enough for homeowners, especially when the eligibility for a short sale and loan modification are nearly identical.

Lenders are putting unreasonably high requirements in order to give homeowners something that doesn't fully meet their needs. Loan modifications require payment (due upfront or within 30 days) in order to negotiate with your lender; if the loan modification does not go through your money is often not refundable.

A short sale, which much higher success rate with the proper negotiator compared to a loan modification, is completed at aboslutely no cost to the homeowner. While it is understandable that many homeowners want to stay in their homes, in this situation it makes more sense to cut losses early in order to save more time, money, and peace of mind later

There are many different types of people who work in the “distressed property” area. Some are legitimate, some are not. Many claim to be able to work miracles on your credit or save your house. Most will either charge high upfront fees or cannot really help you. Most will only “help you” if you have a large amount of equity in your home. Many of the cards and letters you have gotten have probably promised to save your house; however this is very seldom possible. We would recommend that you never sign away your deed to someone who promises to “save your house” from foreclosure. It is probably a scam.

A short sale is a legitimate, formal sale negotiated directly with your lender. It is very much like a traditional sale, but requires special attention to key details. Generally, it is a much better choice (in order not to be scammed) to have negotiations that are transparent and open with your lender versus having an person/company claim to save your house but refuse to talk to your lender openly.

Not all short sales are approved. Many wrongfully believe that it is a matter of luck to get a short sale approved; however, although banks do not want to own property, all it takes is an inexperienced negotiator to prevent lender approval. You shouldn’t have to cross your fingers when you hire a plumber. You don’t have to rely on luck when you entrust an accountant to file your taxes. Ezra doesn't think a short sale be any different.

Instead of leaving a homeowner’s short sale to chance, an effective short sale negotiator will be able to effectively influence the loss mitigator that the best route is to cut their losses, accept a homeowner’s hardship, and sell the property. Again, if a homeowner uses an experienced short sale professional, it is highly likely that the short sale will be approved. In the end, inexperience causes much uncertainty for the homeowner and prevents short sales from being approved.

Financial Hardship is a critical part of the short sale equation. Although banks are not in business of owning real estate, they do not allow just any homeowner to short sale. They require good reason to give a discount for a short sale. They have entire departments called "loss mitigation" whose their entire job is to reduce the loss the bank takes on a bad loan. Giving big discounts to investors increases the loss on a bad loan, so they don't take it lightly.

The only reason a lender will agree to a short sale is if they determine that the short sale will net them more money that proceeding with the foreclosure. Understanding the homeowner's financial hardship is a big part of the lender estimating whether they will be paid in full for the mortgage.

Below are following instances of hardship a lender will consider:

All lenders require certain documents to be submitted for the short sale process to begin. While foreclosure is a last resort for both parties, please realize that lender loss mitigation departments receive hundreds of short sale requests every day. Therefore, it is extremely important that you or your real estate professional submit a complete short sale package, which includes the following information:

• Hardship letter
• Two years of tax returns and W-2's
• Signed IRS Form 4506 "Request for Copy of Tax Form".
• Two most recent bank statements and retirement account statements.
• Two most consecutive payroll stubs
• Client financial sheet including current debt, payments and household budget
• Documentation supporting the hardship (letter of termination, disability letter, doctor bills, divorce decree, bankruptcy discharge, death certificate, etc.)
• A current Comparative Market Analysis (CMA) from a real estate broker or appraiser
• Borrower authorization form
• Estimated net sheet from a title company
• A copy of the executed sales contract

Keep in mind that any incomplete package will be put aside until the loss mitigator receives all the required information.

In order to determine if your lender will consider a short sale and then to actually negotiate the short sale, your short sale negotiator needs be able to speak directly and legally to your lender about the mortgage. The lender will only speak to people you have authorized them to speak with.

By signing a Borrower's Authorization, you give the lender permission to speak to a real estate professional about your loan. That is all it does, but it is necessary. An authorization must be filled out for each mortgage servicer.

After you submit an evaluation questionnaire and we determine that a short sale is possible, you will be asked to sign a Borrower's Authorization and provide some additional financial documentation. If you are not willing to sign this Authorization and/or choose to not provide your supporting documentation, a negotiator cannot proceed with your short sale.

There are many critical steps that are necessary to completing a short sale successfully. It is abosolutely crucial to have knowledgeable representation. Unlike a normal real estate transaction, a short sale takes remarkably more time, effort, and expertise. The following is a timeline that includes these steps.

• Step #1 - Find a buyer for the property. Without a buyer there is no short sale. Therefore, the first step is to list your home with an experienced Realtor. You will want to price the home a little below market value to attract a buyer in a short amount of time. Remember, time is working against you and that your goal is to be relieved of the debt. Don't make the mistake of pricing the home as you normally would. Be very, very aggressive with the price.
  
  
• Step #2 - The short sale package, including the buyer's offer is submitted to the mortgagee. Once a buyer is found and the contract is executed, it's time to submit the short sale package to the lender. The documents to be included in this package are described a little later. Right now, just understand that until a buyer is found, there isn't much to do. However, it is important to gather all the documentation that will be required. Your Realtor can provide you with a list of the required documentation.
  
  
• Step #3-The Borrower's lender will order an appraisal or Broker's Price Opinion (BPO). This is usually conducted by a real estate agent and submitted to the lender. It will most likely be a drive-by BPO unless the condition of the property warrants an interior inspection. The purpose of the BPO is to determine the property's fair market value. This will be a pivotal point in the lender's negotiation.
  
  
• Step #4 - The lender either approves, rejects, or counters the buyer's offer. Most of the time you can expect the lender to make a counter offer. The buyer then will decide whether to accept the lender's offer, reject it, or make a counter offer back to the lender. Just remember, the lender has the final say and must approval the sale.

This process, when done by a skilled negotiator, should take 90-120 days to complete. Be careful of people who make promises to complete it in less time; it simply cannot be done. Agents who take longer than 120 days to close are probably not very familiar with the process. It's important for all parties to know that this is a complex process and that much patience and skill is required.

Lenders, when considering a short sale, look at either a homeowner’s present difficult situation or their future inability to pay their loan. There are some lenders who will consider a short sale even if a homeowner hasn’t missed any payments if the borrower can prove a real financial hardship and show they are not capable of making future payments.

However, most lenders usually won’t accept a short sale unless a homeowner misses a payment. From the lender’s standpoint, missing a payment adds to the homeowner’s case that an actual hardship does exist.

It is difficult for a homeowner to personally find the stance of their lender unless they have a contract secured with a buyer. If a homeowner is only behind one payment and decides to contact her lender, she will be handed over to the customer service or collection department. In all banks, short sales are handled by the loss mitigation department. Due to the current housing crisis, the loss mitigation department is swamped with foreclosures and prefer to talk to short sale experts who are familiar with the process.

The best way to find out the position of your lender regarding short sales is to list your house with short sale specialist and permit them to communicate with your bank. They know the right people to talk to in order to get you the correct answer.      

A former client of ours remarked, “It looked like the only way to get my bank’s attention was to stop making payments.” Homeowners that either have none or just one or one missed payment are usually given the runaround by their lender. However, when a homeowner is a few months delinquent, they have their lender’s complete attention.

We cannot recommend that a homeowner should stop making payments, but that is exactly the course of action many homeowners take to get their bank’s attention.

Yes, you can and it is relatively common. Some lenders even require that a house be listed for sale before approving a short sale in order to show that a discount is necessary.

Unfortunately, many homeowners that are overleveraged on their properties try to list their home at an unrealistic price. Here is an example of a what happens in a typical situation with a choice to continue listing an "upside down" property instead of short saling:

1. Homeowner purchases a home for $848,000 in 2005 with a 5% down payment, the mortgage balance is $805,600.

2. By 2006, the home's value has increased and interest rates have declined so the homeowner refinances to pull cash out or lower their payment. Home value $1,050,000 and new mortgage $892,500.

3. In 2006, homeowner gets laid off and continues to make payments from savings, credit cards, or borrowed monies hoping to land a new job soon.

4. By 2007, savings are gone and still no job. Homeowner begins to miss payments and decides to sell the home for $900,000.

5. As the months pass, the home has not sold because values have dropped back to $780,000 and the foreclosure process has begun. The Real Estate Agent presses to lower the selling price to entice a buyer, however that would require the homeowner to come up with cash at closing to cover the mortgage shortfall.

6. Homeowner is stuck in the house and the foreclosure is proceeding

This is an unfortunate situation that many homeowners are finding themselves; however, this can all be prevented by choosing to short sale if you know your property has negative equity. Click here to see how you can determine if you have negative equity.

Yes, but it is more difficult to negotiate on behalf of a bankrupt homeowner. If the property is currently involved in a bankruptcy, the lender is not the only one who has to approve a short sale--the bankruptcy trustee will also have to approve it. This creates an additional layer of oversight and an additional party which wants to squeeze all it can out of the homeowner. It can still be done, but all conditions have to be perfect.

If you are considering bankruptcy as a way to stop the foreclosure, be sure to get good legal advice, since it is possible that a bankruptcy may not completely stop a foreclosure. Lenders often can get the bankruptcy set aside to continue to pursue a foreclosure. This is called a Motion to Compel Abandonment.

Feel free to contact Ezra today to have him negotiate successfully for you.