The Short Sale Process for Home Sellers

The very first step a homeowner who wants to start the short sale process must do is contact the lender and let them know that they’d like the property to be considered for this type of sale.

A short sale cannot begin without the approval of the bank or mortgage company.

The lender must determine that a short sale is necessary.  That means that homeowners must meet short sale qualifications.  If so, the process generally continues as follows:

1.       Hud-1 or preliminary net income sheet.

2.       Letter of Hardship.

3.       Two years of most recent tax returns and/or W-2 forms.

4.       Two months of recent payroll stubs.

5.       Bank statements.

6.       Market value analysis, your realtor will furnish this for you.

If it’s determined sellers mortgage lender is willing to do short sale the next steps are as follows:

7.       Paperwork and authorizations for agent.

8.       Listing agreement with brokerage to list the property, real estate agent will prepare listing agreement with your terms .

This begins the process to get potential buyers to the property.  If a buyer becomes interested, the next steps generally proceed as follows:

9.       Accept a buyer’s purchase offer.

10.   Listing agent will review and verify buyer’s preapproval and earnest money.

11.   Seller’s completed short sale package (Includes many of the items above, but required documents may vary from bank to bank/state to state.  Please note that an incomplete package may seriously delay or even have the processed cancelled.)

After the package is submitted to the bank, the process may generally proceed as follows:

12.   Short sale package receipt acknowledgment (waiting period can vary from several weeks to a month or more).

13.   Negotiator assignment (could take one or more months).

14.   Broker Price Opinion (Opinion from a real estate broker of market value).

15.   File review for approval.

As you can see, the short sale process can be lengthy and complicated very easily without the help of an experienced  real estate agent. You’ll definitely want to find an agent who is very familiar with the process.

Disclaimer:  Sellers should always get professional advice from their accountant and attorney to make sure a short sale is in the best interest of sellers before proceeding with a short sale.

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