Many real estate agents avoid short sales like the plague.  Thats because most agents believe they are too difficult to handle and don’t understand the process.  However most of these agents are uneducated and don’t understand the process.  

A Certified Distressed Property Expert understands how a short sale works and knows how to successfully navigate the process.  Actually a short sale can be pleasant experience for all parties involved, if handled in the correct manner.

A short sale requires many steps and goes through many stages.  But if done correctly 70 to 80% of the work involved with a short sale can be done in the 1st week.  The entire process of a short sale should take 90 to 120 days.  

As a homeowner you will need to sign a number of documents including the following:

• Listing Agreement and Short Sale Disclosure
•  Authorization Form 
•  Hold Harmless Agreement
• Homeowner Property Checklist
• Homeowner Document Checklist
• Homeowner Financial Worksheet

You will also need to produce a number of items for your lender including:

• Hardship Letter (*)
• Last 2 Months Bank Statements (all borrowers) (**)
• Last 2 Months Pay Stubs (all borrowers) (**)
• Last 2 Years Income Tax Returns (all borrowers)
• Purchase Offer with Proof of Funds and Pre-approval letter

(*)   The Hardship Letter is one of the most important aspects of a successful short sale.  It must illustrate your hardship and how it has significantly affected your ability to make your mortgage payment.  (To read about hardships please read our article on “Acceptable Hardships”).  Short sale acceptance or denial by your lender is very often determined by this letter.  We can provide you with examples or you can find examples online.  Legally an agent can not write the hardship letter for you.

(**) The lender may require updates bank statements and pay stubs every month as the short sale progresses, so make sure to hold onto these when they are mailed to you.  

After the documents above are collected and signed your agent will assemble the short sale package for your lender.  As a CDPE I am trained to compile these packages exactly how the lenders want to see them.  This is to ensure that our packages are not overlooked and or “lost.”  Bank negotiators appreciate clear and concise packages and studies show that such packages are processed and close much quicker. 

Once the above documents are collected and signed properly your house will need to go up for sale.  This is so that we can secure a qualified buyer to purchase the property when the short sale is approved.

You will want to make sure to interview all perspective buyers to make sure they are good candidates and understand the short sale process.  All buyer offers should include a residential purchase agreement, short sale addendum, loan pre-approval, proof of funds, and copy of deposit check.    

Once a buyer has been secured the short sale package and complete buyer offer is packaged together for bank submission.  It is Always a good idea to secure at least 1 or 2 back up buyer offers in case your original buyer can not perform when the short sale is approved.   

After the short sale package is submitted to your lender it is important to follow up weekly to ensure that your file is being processed correctly.

Timeline after submission of short sale package as quoted by major lenders:

Lender receives package and assigns a negotiator - 10 business days

Broker Price Opinion (BPO) or Independent Appraisal is ordered - 30 business days

BPO is received and reviewed by negotiator - 15 business days

Short sale approval or counter is issued - 10 business days 

Closing  - 30 to 45 days

Total time for short sale approval and closing - 90 days

Counter offers may extend the time frame a few days but typically no longer then 120 days to close.

To find out “commons reasons for a delayed short sale” please read our article