In a situation of financial hardship, borrowers who cannot pay their monthly mortgage payments, have to resort to a last ditch effort of selling the property at an amount that falls short of the property loan owed. Sometimes, lenders prefer to sell the property at a loss rather than push the buyer to live up to his commitments that he is not in a position to make. However, the lender will require that the borrower pay off the balance amount also known as the ‘deficiency’ before he is let off the hook.
Contrary to popular belief, the bank does not own the property until the moment of the sale. Hence, you will have to work hand-in-hand with the owner in order to make a successful short sale.
The value appraisal of the property is known as Broker Price Opinion (BPO). When property comes up for short sale, banks send a real estate agent or Broker to the property to assess its value. The second step is to have an influence on the Broker Price Opinion. The idea here is to make the broker or agent to see the value from your perspective. Hence make sure that you are present when the agent visits the property. Influence the agent to quote the lowest possible price for the property.
In the event the bank rejects your short sale citing the BPO as the reason, you can contest the rejection. Make sure that you do not sound too aggressive and request for a second opinion. In most cases, the second BPO will be drastically different. The banks will be ready to negotiate and come down on the price. At this point you will need to go back and forth on the amount until you feel you have quoted the lowest amount the bank will actually accept. When the amount reaches your expectation, it is time to close the short sale deal.