The Eight Steps in a Short Sale Process

Real Estate Agent with Samson Properties 0225 093857

The Eight Steps in a Short Sale Process. This is part five of "What Is A Short Sale?"

   The Eight Steps in a Short Sale Process1- Call the Lender
      You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.
   2- Submit Letter of Authorization
      Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
          o Property Address
          o Loan Reference Number
          o Your Name
          o The Date
          o Your Agent's Name & Contact Information
    3- Preliminary Net Sheet
      This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
    4- Hardship Letter
      The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
    5- Proof of Income and Assets
      It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
    6- Copies of Bank Statements
      If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
    7- Comparative Market Analysis
      Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:
          o Active on the market
          o Pending sales
          o Solds from the past six months.
    8- Purchase Agreement & Listing Agreement
      When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request. Credit report status is not always negotiable.

Prior post include, "The Short Sale Process","Short Sale Consequences", "4 Qualifications for a Short Sale" and 'What Is A Short Sale".

Do you have questions about a Short Sale or how the process works? Feel free to Contact me.


Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Markita Woods NMLS#196099 05/19/2011 02:34 AM
  2. Charles Stallions 11/11/2011 12:34 PM
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Gina Tufano
Ask Gina & Company with Pearson Smith Realty - Sterling, VA
Ask Gina & Company, Northern Virginia Real Estate

Good information!

May 16, 2011 01:35 AM #1
Susan Jacobs
Samson Properties - Gainesville, VA
Realtor-Helping Buyers/Seller

Thanks Gina.

May 16, 2011 01:37 AM #2
Richard and Jean Murphy
Harborview Properties - Portland, ME
(207) 712-4796

This is great advise for owners and Realtors alike, thanks

May 16, 2011 01:45 AM #3
Susan Jacobs
Samson Properties - Gainesville, VA
Realtor-Helping Buyers/Seller

Thanks Richard. Feel free to repost if you would like.

May 16, 2011 02:00 AM #4
Markita Woods NMLS#196099
Fairway Independent Mortgage - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Hi Susan: Thanks for sharing this process in one post. I m reblogging for others to read. I think you very first step is the key tp the short sale process.

May 16, 2011 02:12 AM #5
Susan Jacobs
Samson Properties - Gainesville, VA
Realtor-Helping Buyers/Seller

Thanks Markita. I still have one more post to work on. How it effects your credit.


May 16, 2011 02:41 AM #6
Donna Wood

Susan, this is very helpful and concise information.  In our tax practice, we have had to advise some clients and help determine if they were qualified for hardship and/or income taxation due to the short sale.  Your posts help to clear up many of these questions.  Thanks!

May 21, 2011 02:58 AM #7
Susan Jacobs
Samson Properties - Gainesville, VA
Realtor-Helping Buyers/Seller

Donna, Glad I was able to help.

May 22, 2011 10:22 AM #8
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