Your short sale listing is now under contract, and it's time to get the short sale approval from the lender!

Steps to the short sale approval process!

Gather your Documents!

01

You will need to submit lender required financial documents, your listing agreement, the sale contract, buyer's proof of funds and an estimated settlement statement. It's ultimately best to learn to write write your own estimated settlement statements, but for beginners, get help from the seller's attorney or title company. 

The lender may also have specific addendums for the seller and buyer to complete as part of the sale. Always try to be proactive with documentation the lender may need.

complete inspections.

02

You want the buyer to complete inspections ASAP! If the buyers inspections reveal defects that lead to renegotiating the sale price, you want to know early in the game so you can update your sale documents BEFORE the sale gets approved. Furthermore, if there are major condition issues gather as much documentation as you can about them in order to prepare for the seller's lender's appraisal. 

Prepare for Lenders Appraisal.

03

We are talking about the seller's lenders appraisal for the short sale here. Once the lender has all their required documents, they will order a BPO (Broker Price Opinion) or a full appraisal of the property in order to get a current value on the asset. 

If during inspections you gained knowledge or documentation of hidden defects, make sure the appraiser is made aware of them.  In the short sale world, the lower the short sale lenders appraisal - the easier the approval. Keep in mind this appraisal is totally different from the one the buyer's lender will have.


Continue to check in with the lender!

04

Short selling lenders are notoriously slow and uncommunicative. Keep this in mind. Even if all seems to be moving as it should, check in on the status of the short sale at least once or twice a week. The lender will nearly never reach out to you if there is a delay or some missing paperwork. It is your responsibility to stay on top of the situation and discover and solve delays in the process.

Keep all the Sale Parties engaged and updated.

05

Even if you need nothing from the sellers at the moment, always keep them updated with expected dates, specifically once short sale approval seems within reach. If they have not already moved out, they will need to within 30 days of the approval process so keep the in the loop even prior.

Do the same with the buyers agent. Short sales can take a while and folks become disengaged. You want to keep everyone on track with the end goal in mind at all times.

Short Sale Negotiations.

06

Most of the time, you will have some kind of negotiation period with the lender. Hopefully the appraisals value matches your sale price, so that won't become one of them ( more on that later), but there will still be nitpicking of other fees, and dates. You will likely end up revising the estimated settlement statement several times. 

After this process, a short sale approval letter will be issued and you can move forward to close! 

If you have multiple lienholders, this entire process will be repeated with each one.

Now that you have your short sale approval letter, it's time to prepare to close!

Need help with your short sale?

We offer a range of short sale consulting services and will help you get your sale approved and closed! 

How to list your short sale and get it set up for success! step 1 Price it right

More
Get your short sale listed on the market!

How to handle processing a short sale with a second mortgage or HELOC (home equity line of credit).Often,

More
How to process a short sale with a second mortgage or HELOC

GET YOUR SHORT SALE LISTING UNDER CONTRACT!So you have an offer for your short sale listing! Here is where

More
Secure a buyer and get your short sale listing under contract!
About the Author Minna Reid

Minna Reid is the Broker-Owner of Reid Real Estate Group LLC - a full service CT and FL residential brokerage.

Practicing since 2007, Minna specializes in selling property with complex legal and financial challenges, including short sales, probate sales and tax lien complications.

Share your thoughts

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}