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Fearing foreclosure? Consider a short sale

3. A statement of the property's value. This can be an appraisal or a broker's price opinion. The lower the estimate of the property's current market value, the better it will be for you. You want to show the lender it will not be able to sell the home for enough to satisfy the loan. It may not be pleasant, but you should make the home look as bad as possible on paper. Include things such as abundance of homes on your street or neighborhood for sale -- especially in foreclosure. Other pertinent information to include is the number of rundown or unkempt homes nearby, increasing crime rate, high taxes and insurance rates, and low-rated schools. Prepare a written summary of your property's condition, including a thorough and detailed list of any negatives, such as maintenance problems and evidence of disrepair. This can be tough emotionally. This is, after all, your family home, but this is a necessary part of the process. The longer a lender must hold onto a property the more expensive it becomes. If the lender realizes the property will bring them nothing but headaches, it will be more likely to OK a short sale. Richard Geller, developer of MortgageReliefFormula.com, says, "It's critical to come in with the lowest -- yet sound and ethical -- valuation possible. If you can get a really low BPO and put that in your offer y9ou have a much better chance."

4. A purchase offer or contract. It's a bird-in-the-hand issue for the lender. A signed contract with a sizable earnest money deposit at a specified price can look far better to the lender than a long foreclosure process, ongoing costs and no guarantee at the end of the road. What's more, lenders will not entertain tentative offers. You're not going to get the chance to ask the bank, "If I could find someone willing to pay X number of dollars, would you approve a short sale?" "Remember, Geller says, "listings and pending sales and last year's sales are meaningless. It's all about what willing buyers pay willing sellers. If there has been no actual sales volume, there are no comparables, so there is a lot of room for a low BPO when the sales that have occurred were forced, foreclosure sales and everything's for sale but nothing is selling."

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5. A settlement statement. To go along with the proposed price, this statement -- also called a net sheet -- details exactly how much the lender will end up with and exactly how much of a loss it will be taking. It includes the purchase price, the closing costs and any other costs or fees involved in the transfer of the property. You can get this prepared by the closing agent or real estate lawyer.

Finding a buyer

Before you even thought about a short sale, you probably had your home on the market, hoping to sell it for even a small profit, pay off the mortgage and stave off foreclosure.

But that hasn't worked -- possibly because you're "upside down" -- you owe more than the house is actually worth today.

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