The seller's short
sale package will most likely consist of:
• Letter of authorization, which lets your 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
Writing the Short Sale Offer and
Submitting to the Bank
Before a buyer writes a short sale offer, a
buyer should ask his or her agent for a list of
comparable sales. Banks are not in the business
of giving away a home at rock-bottom pricing.
The bank will want to receive somewhat close to
market value. The short sale price may have
little bearing on market value and may, in fact,
be priced below the comparable sales to
encourage multiple offers.
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
• Seller's short sale package
If the package is
incomplete, the short sale process will be
delayed. In this event, the bank might even
shred the package.
The Short Sale Process at the Bank
Buyers may wait a very long time to get a
response from the bank. It is imperative for the
listing agent to regularly call the bank and
keep careful notes of the short sale process.
Buyers may get so tired of waiting for short
sale approval that they may feel the need to
threaten to cancel if they don't get an answer
within a specified time period.
That type of attitude is self-defeating and will
not speed up the short sale process. If buyers
are the type with little patience, perhaps a
short sale is not for them.
Following is a typical short sale process at the
• Bank acknowledges receipt of the file. This
can take 10 days to a month.
• A negotiator is assigned. This can take 30 to
• A BPO is ordered. The bank probably will
refuse to share the results of the BPO.
• A second negotiator may be assigned. This can
take another 30 days.
• The file is sent for review or to the PSA.
This can take 2 weeks to 30 days.
• The bank may then request that all parties
sign an Arm's-Length Affidavit.
• The bank issues a short sale approval letter.
• The buyer cancels.
I threw in that last line because sometimes I
have to sell my short sales 3 or 4
times before a buyer sticks with the
transaction. Buyers get angry and annoyed
because the short sale process can be so lengthy
that they sometimes cancel without telling
anybody. Some short sales get approval in 6 to 8
weeks. Others take 90 to 120 days, on average.
Tip: Generally the listing agent has some idea
of when the file is sent for final review. At
that point, buyers may want to start the loan
process so they've got a head start in case the
bank gives 2 weeks to close.