Selling a Short Sale

Being upside down in a loan is a hardship. However, a lender looks for other possible hardships when agreeing to a short sale. The reasons that might prompt a bank to grant a short sale include (but are not limited to):

  1. Avoiding Foreclosurebuying a short sale, selling a short sale, buying a short sale in Queen Creek AZ, selling a short sale in Queen Creek AZ, Queen Creek short sale agent, buying a short sale in Phoenix, selling a short sale in Phoenix, Phoenix short sale agent, Jessica Sulliman, The Short Sale Diva
  2. Medical Emergency
  3. Job Transfer or Loss
  4. Bankruptcy
  5. Unemployment
  6. Medical Bills
  7. Death in the Family
  8. Military Service
  9. Divorce
  10. Failed Business

Mortgage companies may grant a short sale if the short sale proposal meets certain criteria. Therefore, the first step involves contacting your lender. You will want to discuss their procedure for short sale transactions, and if they would be willing to work with you. Bank of America recommends working with a licensed real estate agent “who can assist you in listing your home for sale.”

If the lender sees that it’s possible to recover more of their investment with a short sale than a foreclosure, they may approve a short sale. Remember to get approval for a short sale from second mortgages as well (including any debts secured by your property).

Submitting a Short Sale Package to the Lender

Documents typically included in this package from the seller include:

  • Seller’s Handwritten Hardship Letter
  • Authorization to Release information
  • Financial Statement
  • Last Two Bank Statements
  • Last Two W2s
  • Last Two Payroll Stubs
  • Listing Agreement Contract
  • Last Two Years Tax Returns
  • Two Most Recent Mortgage Statements
  • List of Monthly Expenses
  • BPO (Broker Price Options)
  • Summary of Repairs

What Next

Though many lenders say that there must be an offer before submitting a short sale package, there are exceptions. It’s best to remember that the lender is in control here and cooperate as much as possible with them. Either way, with or without an offer, the next step will be for the lender to carefully review your short sale package.

What will they be looking for? The lender will analyze and verify the information in your submitted documents. You need to know that the bank doesn’t want to foreclose on your property. The simple truth is that when foreclosing, banks incur costs. Simply put, a short sale is more cost effective than foreclosure. While it’s true that there are losses to the bank with short sale transactions, foreclosures usually involve more loss to the lender and their bottom line.  At the same time, the hardship must make sense for the bank of agree to a short sale.

What are other factors that come into play when considering a short sale over a foreclosure? After they foreclose on a property, the lender is responsible for its upkeep, taxes, and insurance. So, there are now costs involved where there used to be payments. It’s not hard to do the math here. Do they want costs or do they want payments?  The bank is in the business of making money, and they will choose payments over costs when the figures make sense.

Let the Negotiations Begin

You will want to work with a listing agent who understands, and has experience with, short sale negotiations. Don’t work with inexperienced real estate agents. Negotiations are crucial in short sale transactions. Banks don’t always return phone calls, and you need a die-hard negotiator on your side. Your Realtor® will be working with more than one contact at your bank. It’s critical for them to keep careful notes of each call made. This can save you time down the line.


What’s left? With your short sale package approved, a buyer in line to love your home as much as you have in the past, and the time it took for the short sale to close, you are now ready to move on with your life and repair your credit.

With a team of skilled real estate agents who have experience in short sale transactions in the Phoenix area, we would love to discuss the pros and cons of short sales with you.