Making Short Sales Work

Who would have guessed three years go that we would have hundreds of local Realtors sitting in an auditorium at the Convention Center, learning how to successfully negotiate short sales?
This morning, Coldwell Banker sponsored a three hour seminar for its agents. It was given by Kathy Mehringer, our Director of Risk Management Training.
In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. In such instances, the lender has the right to approve or disapprove of a proposed sale.
Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.
Often banks will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. Lenders have a department (typically called "loss mitigation") that processes potential short sale transactions. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the current foreclosure crisis, they are now more willing to accept short sales than ever before. This is great news for borrowers who are "under-water" or in other words those who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure because of this. They are type of distressed borrower who needs a short sale the most.
What we learned this morning, is that a complete "package", polite persistence, and strong negotiating skills will help our transaction to be one of the few that the lender accepts, and not the many that end up in the shredder.