How To Effectively Complete A Short Sale

How to Effectively Complete a Short Sale

A short sale is an alternative for home owners who may be considering bankruptcy or a foreclosure on their home. They tend to be complicated transactions where a lender will agree to sell a home for less than the total amount due. It’s important to note that not all lenders are interested in short sales, especially if it makes more financial sense for them to foreclose on the property. You have to approach them gingerly and with “kid gloves” in a lot of ways so as to not turn them off to the idea. Additionally, short sales are not a one-size-fits-all solution. Some properties don’t qualify, nor do some sellers.

The process is going to vary from lender to lender, but this is an overview of what you can expect in the short sale process:

Call the Lender

You are trying to get in touch with the person or department at your bank that is responsible for handling short sales. This may require perseverance on your part, but you will want to speak with a supervisor, and note the name of the person making the decision.

Submit a Letter of Authorization

Lenders typically won’t disclose your personal information without prior written consent, and if you are working with a real estate agent, title company or lawyer, your lender will need to speak with them about your file. Give your lender authorization to do so, which will keep the process moving along. An appropriate letter will include:

  • The property address
  • Your loan reference number
  • Your name
  • The date
  • Your real estate agent's name and contact information


Hardship Letter

Additionally, you will need to share with your lender how you found yourself in this situation. This is your plea to the lender to accept less than full payment, and often, the sadder your letter, the better chance you have of being approved. Lenders often empathize with people who have lost their jobs or have had an unexpected medical situation. Be honest and truthful though.

Proof of Income and Assets

This will give your lender a complete picture of your financial situation. Again, you should include just the facts here and always be honest. If you have savings accounts, stocks or bonds, cash, or other real estate, your lender needs to know. In order to qualify for a short sale, they need to know you’re incapable of paying back the debt they are forgiving.

Comparative Market Analysis

If the real estate market where you live declined and your property value decreased as a result, have a comparative market analysis (CMA) completed. This will help substantiate the reason why you cannot sell your home for enough to pay off the lender. Look to your real estate agent to prepare a CMA for you that includes activity in your local market, pending sales, and homes sold in the past six months.

From here, it’s up to the lender to decide if they will approve your short sale. You’ve done the legwork of ensuring that they have what they need to make a sound decision, so sit back and wait for the results.

If you are considering a short sale in Boca Raton or a Palm Beach short sale, please contact our team of local real estate agents. We are experts in the short sale process and premier real estate in Boca Raton and the Palm Beaches.

[cc_author style="single" author="grant"]