How to Negotiate a Short Sale Yourself to Save Your Credit

The first step is to 'buy' yourself as much time as possible. If you have already been 'served papers', or given notice that your lender is going to initiate a foreclosure, you must respond to the 'summons' with a written response stating that you don't agree with the lender's position to do so. This will slow the legal processing of the case. If you are not already behind by 3 payments, you will need to do this at some point unless you can complete this entire process before that happens.

The next step is to contact the lender to confirm that they will consider a short sale. (Not all lenders will accept a short sale all of the time).

Find out what information the lender needs to begin the process and prepare it for submission. Most lenders will not consider a short sale until you have a buyer for your house; others will require you to have your house on the market for 90 days before considering a short sale.

List your house and wait 90 days if necessary or find a buyer that is interested in buying your
home. This may include holding open houses, listing with a good realtor, putting ads in the local paper or online.

Prepare a written offer to submit to your lender. You will also need to contact a title company to prepare a HUD, or settlement statement, that clearly outlines how much money the lender will net in the sale and show exactly where any other money is going.

Fax requested paperwork to lender (contract and/or listing agreement is needed) and call to confirm that they received it (best to be done two days later to allow time for uploading to their systems).

Follow up with lender at least once per week to get the status of your file. This step will need to be repeated until you have been assigned a 'loss mitigator' or 'negotiator' and they have agreed to do a "BPO", or appraisal of the property in its current condition based on current market value. (Be adament about them ordering an 'interior BPO'. Without it you will not likely get the discount needed to sell your house).

At this point you will have to wait for the bank to make a decision of whether or not the offer is satisfactory. They are going to try to get as much money as possible, so expect to act as the middle man during the negotiation process.