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Short Sale

What is a short sale?

A short sale is a real estate transaction where a lender agrees to allow a homeowner to sell their property for less than the mortgage payoff balance.  Generally speaking, this occurs when the homeowner has negative equity as a result of a decline in property values.  

Answers to some important questions about short sales

Does a lender have to agree to a short sale?

A short sale can only occur with approval from the lender.  A homeowner must prove financial hardship in order to justify a short sale.  Also, if there are any other liens on the property besides the first mortgage, any proceeds made payable to them must be negotiated.  

How will a short sale affect the homeowner’s credit? 

A short sale can have a negative impact on the homeowner’s credit, however, this is typically a much better alternative to foreclosure or bankruptcy.  In some cases, you may even be able to negotiate the line item reporting on your credit report.  For those who are at risk of foreclosure, a short sale may help a homeowner delay foreclosure.  By delaying the foreclosure process, the lender gives the homeowner ample time to market and sell the property.

How long does the short sale process take?

A short sale can take several weeks to several months to complete, and this is dependent on several factors.  Prior to getting approved for a short sale, your lender will require documentation to get the process started.  The speed at which a lender reviews these documents can vary from lender to lender.  Things can get further delayed if the lender requests more supporting documentation.  The short sale process is also influenced by the number of liens on the property.  Having an experienced short sale real estate professional by your side can help significantly reduce the length of time to complete a short sale.  A keen understanding of timelines is crucial in order to deal with the nuances associated with a short sale transaction.

What does it take to get started with a short sale?

In order for a lender to approve a short sale, you must prove financial hardship as well as demonstrate the fact that a short sale is the only way out of your situation as a distressed homeowner.  To get started, the following documents will be required:

  • Signed 3rd party authorization from your real estate professional
  • A hardship letter explaining why the homeowner can no longer make payments
  • Proof of income, assets, expenses, liabilities and liens
  • A comparative market analysis of your property that shows your homes probably value
  • A complete short sale application provided by your lender
  • Subject to any other documentation that your lender may require.

Does a short sale cost anything?

No.  A short sale is not supposed to cost the homeowner anything.  There may be 3rd party companies out there which may advertise short sale assistance for a fee, but this is NOT something that you should be charged for.  For the most part, all costs and commissions are usually covered by the lender, and in some cases, the Buyer may pitch in to cover some of the expenses.  Remember, that everything is negotiable.

Is a short sale a better deal for a Buyer?

Not necessarily.  Since the lender is already taking a loss by approving a short sale, the last thing they want to do is to sell the property at a discount.  Generally speaking, a lender will agree to sell the property based on the value recommendation from a licensed Broker or a licensed Appraiser.

Why work with Property Cinch for your short sale transaction?


Our years of short sale experience has allowed us to streamline the process from A-Z. Lenders can be very picky when it comes to putting together a complete short sale package. Rest assured that we have you covered.


When it comes to short sales, timing and up-to-date information is everything. It is crucial that you are aware of the status of your transaction and equally important to work with a Realtor that you can trust. Our regular updates will give you that peace of mind.

Expert Negotiations

The decision to short sell your home may have been difficult, but the process does not have to be. We will negotiate to best represent your needs and concerns when dealing with your lender, lienholders, agents and other parties involved in the transaction.

Thinking of short selling your home?

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