Short Sales 101 – Anatomy of a Short Sale – Part 2

Short Sales 101 - Anatomy of a Short Sale

The easiest way to understand the Short Sale process is to think about qualifying for a mortgage.  When you apply for a mortgage, the lender reviews your recent bank statements, pay stubs, tax returns, etc. to determine your ability to repay the mortgage.  

When you apply for a Short Sale, it’s like undoing a mortgage.  The lender will want to see the same documentation, along with a hardship letter, to determine your inability to repay the mortgage.  If you can do this successfully, the lender will likely approve a Short Sale.

Below is a list of documents that comprise a complete Short Sale package: 

•             Bank Statements for prior two months

•             Pay Stubs for prior 30 days

•             IRS Tax Returns for prior two years

•             Hardship Letter

•             Authorization to Release Information

•             Residential Real Estate Listing Agreement

•             Executed Purchase Contract

•             Lender Pre-approval Letter for Buyer or Proof of Funds for cash offers

•             Preliminary Settlement Statement

Some lenders may require other documents such as an Arms-Length Affidavit and a Short Sale Contract Addendum which they will provide.

If the package arrives for lender review incomplete, oftentimes the lender will just move the file aside and pick up the next one on the stack.  If the real estate agent isn’t diligent about following up with the lender, your file could just sit on the lender’s desk indefinitely with no action being taken.  In the mean time, you’re moving ever closer to foreclosure.

The important thing is working with a REALTOR® who understands the process, knows the proper documents to gather, knows how to submit a complete package, and regularly follows up with the lender.

Based on The Field Guide to Short Sales. Copyright © 2010 by Tom Branch & Gina Branch. 

About Tom Branch

Tom Branch has written 597 posts in this blog.


Have you ever just met someone, but felt you like you'd known him for years? That's what most people experience with Tom. He has a knack for making folks feel right at home. After 21 years in the Air Force, loyalty and honesty are the foundation of everything Tom does. In addition to being a Texas Real Estate Broker, Tom is a Certified Distressed Property Expert (CDPE) and a Short Sales & Foreclosure Resource (SFR).

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