The Process.
There is no universal set of rules or set process regarding a Short Sale, and each lender performs their Short Sale process differently. However, there are some basic general steps that can be expected and considered:
(1) The seller has to prove the seller is experiencing some financial hardship or other type of hardship and will be unable to continue making loan payments. In most cases, the lender will want to see that the seller has been in default. A lender will require the seller to provide a specific package of information regarding tax returns, financial statements, bank statements, and pay stubs; complete a loan application; provide title report; and possibly prepare a draft settlement statement, as well as sending a marketing plan from the Realtorâ, which will be submitted as a Short Sale application package along with the real estate contract.
(2) The lender has to determine the value of the property. Once a seller has proven a hardship as set forth above, then the seller has to demonstrate that the property is worth less than the total amount that is owed to the seller's lender and other lien holders. The lender may require a broker's price opinion, a comparative market analysis, or, even in some cases, an appraisal of the property. The seller will be responsible for the costs of these items.
(3) The seller has to find a buyer and enter into a contract because, without a contract, a Short Sale cannot occur. Each lender of the seller has to approve the contract and the
