A short sale is when your Lien Holder(s) agree to accept less than you owe in order for you to sell your home. They agree to a discount of the mortgage debt owed.

A lender or bank takes a discount or agrees to a short sale because it saves them money. On average a lender loses between $30,000 and $80,000 on each property that they take back as a foreclosure.

The answer is no. Not all lenders do short sales.

Almost everyone who is facing a true financial hardship qualifies for a short sale. However, each lender and loan type has a different set of requirements specific to them. The general requirements for a seller to qualify for a short sale are: A provable financial hardship, behind on payments or facing imminent default, no equity in the property being shorted, no liquid assets, and a lender or loan type with a clearly defined short sale process.

Some lenders will entertain taking a discount when a homeowner is current on their mortgage. If you are current on your payments, contact an attorney to explore your options prior to making any changes.

This depends on the lender. Some lenders require a property to be 90 days in default before they will entertain a short sale offer; other lenders will entertain a short sale even if it is not in default.

Every lender or bank has its own set of required information and some may even have a set of
paperwork specific to them. But, in general, most banks require at least the following:

  • A handwritten hardship letter or hardship affidavit
  • Financial statements
  • 2 years tax returns
  • 2 months bank statements
  • 2 months pay stubs

Throughout the process additional paperwork may be requested. So, be sure to keep everything handy.

The steps of the process are always changing with new government and bank guidelines. Talk to an attorney or real estate professional who specializes in short sales to get the most current information.




A short sale is a type of real estate transaction that occurs when the homeowner owes more to his lender(s) than the current market value of the home. Although the home is sold by its owner, the purchase offer has to be approved by the bank or investor who holds the loan.

Yes, buying and selling a home offered as a short sale generally may take longer than a non-short sale purchase. The actual time depends on a number of variables.

Some banks respond to a buyer's offer in a few days, while others may take up to 30 days to respond to the initial offer. Requirements may change, so check with your real estate agent to determine a realistic time frame. Patience is a virtue when buying or selling a short sale.

This varies on every transaction. In general, the home buyer will be asked to sign an "AS IS" addendum as part of the purchase contract. The "AS IS" addendum puts the home buyer on notice that the home is being offered in the condition you see it and no repairs will be made.

There are requirements under the purchase contract and the AS IS addendum for some items to be in working order. A conversation with your real estate agent about this subject is needed to go over the various possibilities.

This is probably one of the most confusing parts of buying a short sale home. Normally a buyer negotiates the purchase price with the homeowner and you are done. However, with a short sale it's a different story.

The home seller's agent will list the home. He or she will try to get a few people to submit offers and present them to the home seller. The seller's agent then submits the best offer to the lender/bank for approval. The bank will compare the appraised value of the home with your offer. If they like what they see they may accept it or not. The lender may order the seller's agent to send a counter offer to the agent who is representing you.

Short sales have a lot of variables so there is not a cut and dried answer to this question.

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