The Balance Small Business
The Real Estate Short Sale Process Step-by-Step
  • Becoming an Owner
    • Small Business
    • Entrepreneurship
    • Online Business
    • Home Business
    • View All
  • Industries
    • Retail Small Business
    • Nonprofit Organizations
    • Restauranting
    • Freelancing & Consulting
    • View All
  • Operations
    • Business Law & Taxes
    • Marketing
    • Accounting
    • Supply Chain Management
    • View All
visit our other sites
Working With Investors
  • Real Estate Business
  • Investment Formulas
    Working With Investors Real Estate Business

    The Real Estate Short Sale Process Step-by-Step

    • Share
    • Flip
    • Pin
    • Email
    By James Kimmons
    Updated February 15, 2017

    Real estate investors can frequently make very profitable purchases of real estate through a short sale. Many short sales do not get approved or fall through for a variety of reasons. Learn here the step-by-step process to initiate a short sale, starting with the homeowner-borrower and moving through lender negotiations to the closing.

  • 01
    8 Tips To Get You Started In Short Sale Representation

    Two businessmen looking up at city skyline.
    ••• Oli Kellett/ Iconica/ Getty images

    The short sale niche is certainly growing in importance and popularity.  Lenders are overwhelmed with foreclosure properties, and the word is that they're getting a little easier to deal with on short sale offers.  A successful short sale helps the lender to avoid yet one more foreclosure home on their books.  These 8 tips will give the real estate professional a quick look at what they need to be aware of in working with sellers and lenders in a short sale transaction.

  • 02
    The Property Valuation Analysis for a Short Sale

    Agent For Sale Sign
    ••• CanStockPhoto

    Short sales will not work if there is sufficient equity in the home for the lender to sell it and at least break even in a foreclosure. The homeowner must be "upside-down" in their loan. Learn how to determine if this is the case.

    **Update:  Since this was written short sales volume has dropped significantly as markets improved.  However, even into 2016, there are still homeowners underwater in their mortgages.  Prices have been rising, so they're not as far under as in the past.  

    The good news is that it gets easier to come to a price agreement when the home's value is closer to the mortgage.  People who have been waiting for years to get back the equity they lost during the housing and mortgage crash may not have any more time to wait.  This could be a good time to look at helping them out through a short sale and getting a great deal on a good home as well.

  • 03
    Contacting the Lender for a Short Sale Application

    Time Management for Real Estate
    ••• Jim Kimmons

    Lenders will not talk to investors, potential buyers or real estate agents unless they are instructed to by the borrower. You will need to get their approval in writing, contact the lender with that approval, and make the first telephone contact. Learn about it here.

    Don't expect a hearty welcome.  They really aren't excited about short sales or working with investors.  You may have to keep after them to get the process in gear.

  • 04
    Writing the Hardship Letter for a Short Sale

    Duplex Property
    ••• CanStockPhoto

    The hardship letter is the cover for the short sale package. It is a lot like the cover letter for a job resume. It must be convincing and complete. The lender must get the first impression that it's a short sale or a foreclosure or bankruptcy.

    "Hardship" means exactly what it says.  The more you have to convince the lender that the borrower's back is against the wall, the more likely you are to get a good response.

  • 05
    Backing Up the Numbers With the Short Sale Package

    Commercial Lending
    ••• Commercial Lending. canstockphoto

    The meat of your short sale presentation backs up the statements made in the hardship letter. You prepare a thorough and detailed set of documents and financial data to support the claim that a short sale is a good solution for the lender.

    Do a CMA that supports the view that the home isn't going to sell for as much or more than your offer in the current market.  

  • 06
    Elements of a Short Sale Purchase Agreement

    real estate agent greeting couple at house
    ••• Noel Hendrickson/Blend Images/Getty Images

    Learn the things you need to consider in the preparation of a short sale purchase agreement. Where should you get one? Do you need an attorney? What elements need to be present in the purchase agreement?

  • 07
    What the Lender Does With the Short Sale Package

    Real Estate Investor
    ••• Real Estate Investor Clients. CanStockPhoto

    If you prepared a thorough short sale package, the lender will be evaluating your numbers and getting some of their own. Learn about it here.

  • 08
    Negotiating the Short Sale with the Lender & Going to Closing

    Negotiation
    ••• CanStockPhoto

    You may have to go back and forth with the loss mitigation department at the lender to get an acceptance of a short sale. Learn about this negotiation and the importance of a fast close.

  • For Sale By Owner Sign (FSBO)

    Getting a Short Sale to the Closing Table

  • Subdivision rooftops in Newmarket, Ontario, Canada.

    Are Private Real Estate Investment Trusts (REIT) for You?

  • Couple using laptop in living room

    Here Are Some Tips on How You Can Invest in Real Estate Without Cash

  • Real Estate Rental Property

    Top 6 Landlord Tips

  • Real Estate Investing

    The Surprisingly Simple Way to Make Money in Real Estate

  • Real Estate Valuation in Investing

  • dollar bills surrounded by blue people

    Building a Real Estate Investment Team

  • Real Estate Wholesaling

    What is Real Estate Wholesaling?

  • Hard & Private Money Lenders

    What You Need to Know About Hard Money & Private Money Resources

  • Realtor giving house key to buyer

    The Effective Real Estate Investor Buyer Database

  • Real Estate investor

    Real Estate Investor Loan Types

  • Businessman looking at a modern building

    How Can You Invest in Commercial Real Estate?

  • real estate agent on cell phone

    Real Estate Investing Buyer List - How to Build Yours

  • Real estate concept - businessman signs contract behind home architectural model

    Compare Bonds to Rental Real Estate Investment

  • Couple renovating home.

    What is ARV, After Repair Value in Real Estate Investing?

  • Man standing in field admiring imaginary house

    Is Real Estate Still a Good Investment?

The Balance Small Business
Our Best Money Tips, Delivered
You're in! Thanks for signing up.
There was an error. Please try again.
Stay Connected
  • Becoming an Owner
  • Industries
  • Operations
  • About Us
  • Advertise
  • Terms of Use
  • Privacy Policy
  • Careers
  • Contact