//What is a SHORT SALE?

What is a SHORT SALE?

A short sale, the homeowner agrees to sell their house for less than the amount owed on the mortgage loan. The lender controls the sales price, in order for the deal to be approved. 

For a sale to be considered a short sale: 

The homeowner must be so far behind on mortgage payments that they can not catch up and they are in a distressing situation. 

The lender’s goal is to recover as much money as they can. Even-though an agent lists the property for a lower amount does not mean the lender has to accept the offer, even if the seller accepts it. 

A homeowner will try a short sale process in order to avoid foreclosure. Just remember, the process of a short sale is not even close to short… 

Seller Short Sale Key Symptom: 

Financial Distress 

Short Sale vs Foreclosure Credit effect 

A short sale​ will stay on your credit report for 7 years, but you can finance a new home purchase within one to seven years of a short sale depending on credit score, loan type, down payment, and the circumstances that led to the short sale. ​A Short Sale on your credit is less damaging to your credit than having a foreclosure on your credit unless youcanpersuade the lender to report the debt to the credit bureaus as “paid in full”. 

A Foreclosurehas a considerable negative impact on credit scores as to any other derogatory entries. The entry remains on your credit report for 7 years from the date of the first missed payment that led to the foreclosure. Foreclosures typically occur only after you miss at least four successive monthly payments (120 days of delinquency). Your score can drop between 140 to 160 points. 


The only benefit to the lender is that a short sale is faster and less expensive for them than a foreclosure. Once it’s clear a foreclosure is going to be unavoidable, a lender is more likely to approve a short sale request. 

The misconception of a Short Sale and a Foreclosure—Let’s break this down. 

Foreclosure is not the same as Short Sale 

AForeclosure, the bank takes ownership of the home after the homeowner is unable to make payments. This process is initiated by the lender. The lender will force the sale of the home in order to recoup as much of the original loan amount as possible. if the homeowner(s) are still living in the house, the lender will evict them during the foreclosure process. The lender will sell the property either through an auction or through a real estate agent. 

The foreclosure process typically takes less time than a short sale because the lender is trying to recoup as quickly as possible. 

Why A Short Sale? 

If things have gotten so bad and so far behind. Selling a house through the short sale process is never ideal; the only reason a homeowner would want to do it is to avoid foreclosure. A short sale is better for your Sanity, credit report, and future. 

Items for closing the deal! 

*The seller must cooperate and provide all necessary documents and not hide anything from the lender to consider the short sale or waist a buyers time 

*Comparative market analysis (CMA)- determines the value of a property by considering other similar properties that have recently sold. This shows that the price of the property has declined and the property won’t sell for the amount owed. 

*Income tax 4506t
*2 months of current bank statements or going back at least two years. *Death Certificate 

*A hardship letter where the seller must explain why he or she cannot continue making any payments or pay any HOA fees (if applicable). The sadder the story, the better. Pour your heart out. Be real but convincing. 

*A list of liens. There may be more than one, so determine how many liens are on the property. The more information you provide the better. 

*Proof of Funds from Buyer along with purchase contract 

*The process is not the same with all lenders, but the documents for the most part are. 

Why Lenders Do Short Sales 

The only benefit to the lender is that a short sale is faster and less expensive for them than a foreclosure. Once it’s clear a foreclosure is going to be unavoidable, a lender is more likely to approve a short sale request. 

Find a Short Sale Expert! 


If you are looking to move to Dallas Texas and need an expert to help you find the right neighborhood, contact us today at ReByKaylee.

Kaylee McMahon

Apartment investor/ TREC® Brokerage LLC Owner

c: 469-990-4627 (text or call)



IG: Rebykaylee

By | 2021-01-06T17:18:12+00:00 January 6th, 2021|Uncategorized|Comments Off on What is a SHORT SALE?

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