The Short Sale Process for Sellers

Short selling can be confusing. So we have put together a simple, honest guide to the short sale process for sellers. If you’re a buyer, we have a similar resource for buying a short sale.

Overview: How the Short Sale Process Works

A short sale is comprised of several key stages:

  1. Specialist selection
  2. Declaration and proof of hardship
  3. Property valuation
  4. Short sale application
  5. Short sale agreement
  6. Find a buyer
  7. Negotiation (with lender and buyer)
  8. Closing

Now let’s examine each stage step-by-step. The most important decision you make is in selecting an specialist. Your short sale specialist is your advocate, your guide, and your negotiator. Be selective and find an specialist that you feel comfortable working with. Ask questions and make sure they provide answers to your satisfaction. A bad short sale specialist can cost you a lot — time, money, and more. An excellent short sale specialist can make the seven steps above feel like a breeze. Do your due diligence and find a reputable, experienced specialist.

Assuming you found a qualified and reliable specialist, now comes your contributions. Your contributions consist of providing proof of hardship and in completing paperwork. Your specialist will guide and facilitate the remainder of the process.

How to Short Sale A House: Step-by-Step

First, find an specialist. As mentioned above, don’t select just any specialist that says s/he “does short sales.” Find an experienced specialist. Check references. We’ve made it easy for you at Check out our network of qualified short sales specialists and find one for free.

Second, assemble and declare proof of hardship. Before moving forward, you’ll need to prove that you’ve endured such hardship:

  • job loss
  • loss of income
  • relocation
  • illness
  • divorce
  • death of co-borrower
  • declining local market property values
  • business failure
  • bankruptcy

Next, you’ll need to draft a letter of hardship (talk to your specialist about the ins-and-outs of this letter) and follow with proof of hardship, which often requires financial documents to substantiate your case.

Third, have your property appraised. At the end of the day, the short sale is a win-win for everyone if conducted properly. The lender is compensated for a mortgage they may have never been paid out on or would have been underpaid on had it gone into foreclosure. (It’s a pre-emptive measure on their part. ) The buyer gets a great deal on a house. The seller (you!) finds debt relief with minimized effects on credit score and the potential for purchasing a home in the future. So what’s the key here? The appraisal! Your property value needs to meet the win-win criteria above. The property is ideally valued at less than the value of your mortgage (thus you are “underwater”).

Fourth, you’ll need to apply for a short sale through your lender. Basically, you’ll do paperwork by providing proof of hardship and your property valuation. Your specialist will walk you through the details. Just know–paperwork is in your future!

Fifth, find a buyer for your property. An effective real estate specialist will find a buyer for your short sale property. This brings the great triad together–lender, seller, and buyer. Once your lender has approved you for a short sale and you’ve found a buyer, it’s negotiation time! Not so fast though….

Sixth, negotiate the sale. Your specialist – or if you elect to use an attorney, your attorney – will negotiate the details of the sale. This is why we emphasize working with experienced specialist . From beginning to end, including negotiation, the average time of a short sale varies between two months up to nine months. Be patient! Negotiations are complex and require a qualified specialist to make the process painless.

Seventh, seal the deal. With your specialist you’ll cross your I’s and dot your T’s. Ultimately, you have now relieved yourself of debt, protected your credit, your future, and put a smile on both the lender and buyer’s faces.

Ready to speak with a qualified short sale specialist? Still have questions? Contact an specialist now.