A Look at the Key Players in a Short Sale

Short Sale Questions And Answers

The term “short sale” has been on the tips of peoples’ tongues for years, and while many people understand the gist of what a short sale is, it’s critical to understand the short sale process in its entirety if you’re considering selling your Palm Beach real estate this way. There are a number of different situations that can lead to a short sale, like the loss of a job, a divorce, or even an unexpected medical emergency that drains your bank account. Generally, a bank will agree to a short sale if borrowers have experienced one of these hardships, or if they owe more on their home than it is worth.

While sitting down with a qualified real estate professional and/or a financial advisor is best, here’s a look at the key players in the short sale process to help you better understand this layered real estate transaction.

The Seller: In order to be considered for a short sale as a seller, you will need to submit a financial package to your bank. Typically, a seller's short sale package will include:

  • A letter detailing your hardship
  • Authorization letter so your real estate agent may speak to the bank
  • Completed financial statement
  • Two years worth of tax returns (previous two years)
  • W-2's for the last two years
  • Copies of recent payroll stubs
  • Two months worth of bank statements (previous two months)
  • List of recent comparable sales in your area, or comparative market analysis
  • HUD-1 or preliminary net sheet


While each bank has their own guidelines regarding a short sale, the basic process is usually the same.

The Buyer: Buyers interested in purchasing a short sale property often are in the most precarious position. They have to hurry up and get their offer together, only to wait for extended periods of time for the bank to review it. To make things easier, sit down with your real estate agent and ask for a list of comparable sales if you’re considering making an offer on a short sale property. Banks that receive offers that are close to market value are much more likely to accept them.

As a buyer, it’s important to make sure this package is complete, otherwise it can delay the process and land you in a pile of paperwork from which you may never emerge. Some banks handle incomplete packages by shredding them.

The Bank: Perhaps the most important player in the short sale game, the bank has the power to make or break a deal. While banks aren’t generally in the business of selling homes, they have found themselves the owners of numerous properties after the housing market fell to pieces in 2007. The priority of the bank is to lend money, so it’s prudent for your listing agent to continually check-in on the process and keep detailed notes.

Many buyers and sellers get discouraged by how long the process takes, but remember, a bank’s primary function is not to sell a home. If you’re not a patient person, a short sale might not be the best course of action for you. Additionally, keep in mind that just because a short sale approval letter has been issued, sellers and buyers can still back out. Unfortunately, there’s no specific timeline for a short sale, so patience is essential whether you’re a buyer or a seller.

If you’re looking for a short sale property in Palm Beach, or, you would like more information about short selling your home, we hope you will give us a call. Our team of expert real estate agents are short sale specialists and we would love to help you.

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