The Basics of a Short Sale

The Basics of a Short Sale

The Basics of a Short Sale

Banks grant short sales for 2 reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.  Some banks don't require any other hardship than the property being underwater.

A few examples of a hardship are:

  • Unemployment / reduced income
  • Divorce
  • Medical emergency
  • Job transfer out of town
  • Bankruptcy
  • Death

The seller will need to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines but the basic procedure is similar from bank to bank. The seller's short sale package will consist of:

  • Letter of authorization, which lets agent speak to the bank.
  • HUD-1 or preliminary net sheet
  • Completed financial statement
  • Seller's hardship letter
  • 2 years of tax returns
  • 2 years of W-2s
  • Recent payroll stubs
  • Last 2 months of bank statements
  • Comparative market analysis or list of recent comparable sales

Writing the Short Sale Offer and Submitting to the Bank

After the seller accepts the offer, the listing agent will send the following items to the bank:

  • Listing agreement
  • Executed purchase offer
  • Buyer's preapproval letter and copy of earnest money check
  • Seller's short sale package

Following is a typical short sale process at the bank:

  • Bank acknowledges receipt of the file. This can take 10 days to a month.
  • A negotiator is assigned. This can take 30 days.
  • A BPO is ordered. The bank probably will refuse to share the results of the BPO.
  • The file is sent for review, this can take 2 weeks to 30 days.
  • The bank will request that all parties sign an Arm's-Length Affidavit.
  • The bank issues a short sale approval letter.

Contact Information

Photo of Cindy Gardner Real Estate
Cindy Gardner
Century 21 New Millennium
2448 Holly Avenue
Annapolis MD 21401
410-703-9202
Fax: 443-458-0174

Now merged with Century 21 New Millennium with Listing Agents in Virginia and Washington, DC to handle your Short Sales.  Also facilitating Short Sales in Anne Arundel County, Prince Georges County, Howard County, Montgomery County, Baltimore County, Baltimore City, Calvert County, Charles County, Carrol County, Frederick County, Talbot County and Queen Anne’s County, Maryland

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Short Sale Expert

Cindy Gardner
Century 21 New Millennium
2448 Holly Avenue
Annapolis, MD 21401
 Phone: 410.703.9202
  Fax: 443.458.0174
Cindy.Gardner@C21NM.com