A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

But to be technical, here's a more official definition:

•A homeowner is 'short' when the amount owed on his/her property is higher than current market value.
•A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.


For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:

•Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
•Monthly Income Shortfall – In other words: "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
•Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Reasons a Lender may consider a Short Sale:

Health Issues
Adjustable Loan Rates Resetting
Predatory Loans
Divorce/Separation
Overextended financially
Job loss or transfer
Pre-foreclosure
Foreclosures are very costly to lenders

The process:

Prepare a letter to lender explaining hardship.

Lender will usually request the following:

1. Two years of most recent Tax Returns
2. Two current pay stubs
3. Two most recent Bank Statements
4. Recent Statements for 401K, Retirement & Investment Accounts
5. A letter from seller authorizing Realtor to negotiate on your behalf
6. Loan payment coupons and/or address/account# of Lender

Information Realtor will need to negotiate with Lender:

• How far behind are you on your payments?

• Do you have any other liens on the property?

• What other assets do you have?

• How far behind are you on taxes and homeowners insurance?

• Have you decided where to go when you sell your property?

• Are you willing to maintain property and work with Realtor in selling property?


This all seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. Sue hold the CDPE® Designation and together with Jorgine, they are ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction.

If you have questions or feel you may qualify for a short sale, please contact us for a free consultation.

Understanding your options now could mean all the difference in the world.