Short Sales  FAQ

Short sales have become a common occurrence in the Lee County, FL real estate market.  A  short sale is defined as when a lender accepts a lesser amount of money than what is currently owed by the borrower when the home is sold.  Hence, the home is sold at a price short of what is actually owed.  A short sale has its benefits in the real estate market because it can help a seller who is in financial trouble sell a home that otherwise would go to foreclosure, and it helps the buyer purchase the home at a price more inline with the current market.

The first step to a short sale is the seller decides to sell the home and lists it with a real estate agent.  I know of no mortgage lender who will do a short sale on a home that has not been listed for sale and exposed to the broader real estate market.  Lenders insist on this step because it helps ensure that they are receiving the maximum market price for the home when it does sell.  The real estate agent should price the home according to the current market trends, and should make regular price reductions until an offer is obtained.

The next step involves the seller completing a short sale package that is provided by the lender.  This will include an extensive financial disclosure, plus a hardship letter explaining the nature of and need for the short sale.  This short sale package can be quite detailed and must be completed accurately and honestly.  If the lender detects fraud, or if they detect even honest inconsistencies, they will reject the short sale and could possibly have legal recourse.  I would strongly recommend coordinating the submission of this package with your real estate agent and any offers you receive from buyers.

A further step involves my favorite part of the short sale process…  Waiting…  You wait for an offer, negotiate as you normally would for the best terms possible from the buyer, and include a statement in the final contract that lets all parties know that the home is sold subject to lender approval.  Then you compile all of your paperwork and submit it to the appropriate party at the mortgage lender for the short sale, and then you wait some more…

If your file passes the mortgage lenders basic short sale criteria it will be assigned to a negotiator.  The negotiator will be the person who ultimately determines the fate of the short sale package.  It is possible that in certain extreme cases you will get further up the management totem pole at the lender, but most likely the negotiator will be your primary contact.  The negotiator will act just like any other party to contract negotiations and either reject, accept, or counteroffer the buyer’s offer.  They will usually communicate their responses verbally, but you will be expected to put yours in writing.

Finally, after all of the waiting, phone calls, and emails, you may find yourself with an acceptance of the short sale from the lender and can move forward with the closing.  If you do get rejected, make sure you discover exactly why so you can either resubmit the file with the necessary corrections, or you know for the next time what the lender is looking for in an offer.


The Short Sale negotiation process can be rather lengthy. It may take several weeks to several months for an approval. Many Lenders will have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a Short Sale approved. So, it is important to be patient during this long process.

Maybe, maybe not. Just starting a Short Sale will NOT automatically stop a foreclosure. However, many times we can convince a Lender to stop the foreclosure to let us attempt to negotiate the Short Sale. While there are no guarantees, it is worth the attempt.


Again, there are no guarantees. We cannot, have not, and will not make promises to you that this will work. Once you miss a payment, the Lender is in charge and can proceed to foreclosure if they choose. But we know they do not want to and we are very good at presenting alternatives to the Lender that they often want to accept, as opposed to moving forward with a foreclosure. We are very proficient at what we do, but NO GUARANTEES are being made as to whether or not the Lender will accept the Short Sale.


No. A universal requirement of Lenders in granting a Short Sale is that the borrower will not get any proceeds from the sale of the property. Being that the Lender is going to take a loss on your loan, they are most certainly not going to allow you to profit from the situation.


Your house will likely go to foreclosure. A Short Sale is something we try after you have exhausted your other options.


A Lender may offer a “release”, which is a security instrument against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and thus avoid foreclosure. Disadvantages: The remaining debt on the property (sometimes called a “deficiency”) still exists. In other words, you are still liable for the note and still owe the money to the Lender. Reality: It is not likely the Lender will purse the deficiency unless you have other significant assets. However, if you chose not to try the Short Sale before going to foreclosure, and then you end up going to foreclosure, it will result in you having a deficiency anyhow.

A Lender may agree to accept less than they are owed as complete and total satisfaction of the note and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owed. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences that you should discuss with your tax advisor due to the fact the Lender is making money you owe them disappear. Sometimes our negotiations are successful in obtaining a satisfaction. However, there are other times where the lender will only negotiate to a release.

The Lender will require a review of a financial package that usually includes: (2) month’s banks statements, (2) months paycheck stubs, (2) year’s tax return, Financial Worksheet and other information. The leading cause of delay and even denial of our offer to the Lender is caused by the Seller failing to cooperate and/or deliver the necessary items in a timely fashion. To help us succeed, please find as much of this information as you can right now and complete the attached “Financial Worksheet”. These things wilt help us work foster and increase your odds of a successful Short Sale.

Expectations and Timeline

Marketing your home:
Your home will be shown to both investors and traditional buyers. During this process, your home may be shown several times a day in some cases. The goal is to get the highest and best offer in the shortest time possible. Those viewing or calling to view your home have been instructed not to bother you with questions regarding the short sale so as to not put any additional stress on you.

The First Offer:
Once an offer is received on your property, to will schedule an appointment for you to come in and sign the Purchase Agreement (this should only take 5 minutes). Although, you do need lo sign one offer, your property can attract multiple offers. All offers will be submitted to the lender(s) for their review and you will not need to sign each and every offer that we receive. Towards the end of the process, when the lender accepts an offer, you will need to sign that offer in order for us to open escrow.

The Process:
Once we have sent the offer(s) to the lender(s), the actual Short Sale process can take anywhere from 4 weeks to 4 months. This timeline varies with each lender. To keep you informed, I have developed a system which will enable you to get updates from me on a regular basis without actually having to call me. First, you will be able to call any time of day to 239-225-3172 and leave me a message.

The second way to get an update is to send me an email with your properly address and question in the subject line. Due to high volume of calls from prospects, clients, agents, escrow offices and lenders, if is almost impossible for me to respond/return calls same day. In many cases I am not able to return calls personally, since I’m spending most of my time negotiating a successful transaction with your lender(s). Please understand that I am not intentionally waiting to return phone calls and I am not ignoring your messages, it is simply not humanly possible for me to return all my own calls in a timely manner and still move forward to a successful transaction. Know that I will return all calls within 24hrs to give you an update.

After the lender reviews the Short Sale package, a BPO (Broker’s Price Opinion) will be ordered by the lender. This is similar to an appraisal and once the lender receives their report, they will usually make a final decision shortly thereafter. The lender orders the BPO so they can figure out what their net proceeds will be (how much of a loss they will be writing off). Your property will remain ‘Active’ on the MLS until the lender accepts the offer. Please be patient throughout this process. At times you may feel things are going too slow, but remember this is not a regular transaction and can take longer to complete.
The Accepted Offer:
Once an offer has been approved by the lender, I will notify you that we are going to proceed to close the transaction. The lender may demand to close escrow anywhere from 10-30 days, so be prepared. If the buyer does not close by the lender’s deadline, the next highest bidder in line may be accepted.
“If the buyer(s) cannot perform and close on time, the lender may decide to proceed with foreclosure thus severing the opportunity for all parties involved to complete a successful transaction.”

The Close of Escrow:

You, as the seller, will be instructed to sign seller documents at the escrow office. Please bring with you your I.D., all keys, garage door openers, and a good attitude. We will celebrate your new freedom from this financial burden and stress.
Your Financial Freedom:
Keep all of your copies of the documents pertaining to this sale in a safe place. Call me with your new forwarding address so I can keep in touch with you through the year and offer you assistance in preparing yourself for future success. Try not to incur any new debt and try to keep low balances on any credit cards you may have. Maintain good consumer credit by not paying late on your currently active accounts. Pay your rent by check or some other way that can be tracked to show evidence that you are paying on time. This will help you should you choose to purchase a new property in the future.

Required Short Sale Documentation:

Please gather all the critical documents listed below immediately:

‘      Hardship Letter
‘      Financial Statement
‘      2 years Tax Returns
‘      3 Most Recent Paystubs
‘      3 Months Bank Statements

If you should have any questions or are missing any of the above mentioned documents, please give us a call, so we may further assist you.

*The information contained in this website is for informational purposes only and is an opinion of the Author.
There are no warranties or guarantee’s, implied or expressed. Consult your Accountant and or Attorney for advice