The Short Sale Process

Short Sale Process

Short Sale Process

Ok, so now you know what a short sale is and you are probably wondering, “what’s the next step?” Well there are a couple of significant steps involved in the short sale process. Let’s discuss the six major steps to successfully conducting a short sale.

Step #1 – Understand your options and know what you are getting into 

Let’s start out by saying a short sale is not a good solution for everyone! If you have enough cash to cover the shortfall between your mortgage balance and your sales price, it may make sense to come out of pocket and proceed with a traditional sale to salvage your credit instead of conducting a short sale. If your credit is already in the toilet, that option, then, makes less sense. It’s sort of a catch 22. You see, a short sale WILL affect your credit score and your ability to purchase another home in the near future. Short sales won’t affect your credit score as much as a foreclosure will, however. Most banks now require at least 2 to 3 years before they will consider a loan for someone who has conducted a short sale (and that’s with a near perfect credit history after the short sale). Banks are requiring a near perfect credit history for 5-7 years before they will consider a loan for someone who has allowed his or her home to foreclose. 

A short sale can be a good solution for someone who is experiencing a financial hardship, is going through a divorce, has a medical issue, or needs to relocate due to a job offer and isn’t too concerned about their credit score (well, for at least the next couple of years). Many times, as long as you can justify a legitimate hardship, the lender will be more inclined to consider a short sale. Some of the time (and more often than not), a lender will consider a short sale just because it makes financial sense for them to do so. Foreclosing on a home is a costly endeavor that involves attorney fees, court fees, carrying costs for properties that they now own (REO or Real Estate Owned by the bank), repair costs, marketing fees, and lots of other expensive costs. If a lender can have you stay in the property, maintain it in decent condition, and short sell it at a price that is somewhat discounted they stand to lose less money than selling it as a foreclosure.

Other options include a loan modification, deed in lieu of foreclosure, conversion,forebearance, or refinancing. We don’t specialize in any of these other potential solutions but you may want to talk with your lender before proceeding with a short sale.


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Watch this video to compare a short sale vs a foreclosure


Step #2 – Composing the Financial Package

One of the most important reasons why the short sale process fails is because incomplete short sale packages are sent to the banks. It is imperative that all pertinent financial documentation accompany an accepted offer or the short sale package will either be kicked back or placed on the bottom of a huge stack of other potential short sales. To see the required documents, please click on the Short Sale Checklist link. These documents should be furnished to Craig as soon as the short sale process is initiated.  

Step #3 – Placing the home on the market

Your home needs to be in as pristine shape as possible. I know that pristine is a relative term and will most likely depend upon how much spare money you have to fix and spruce it up, however, you will be competing with many renovated foreclosed properties plus other home sellers that may or may not be conducting a short sale. The better your home looks and appears to be taken care of, the faster your home will sell and the more money it will sell for (the bank will appreciate that). Consult with Craig about a reasonable short sale price to start at to generate interest and potentially be acceptable to the bank. Should your home need landscaping, painting, gutters cleaned, pressure washing, or other cosmetic issues addressed, Craig can reasonably assist you with these items.

Step #4 – Accepting a contract and submitting the short sale package to the bank

Hopefully, you will receive numerous offers on your home throughout the short sale process. Craig will strategize with you on which offer to work with, terms that will be beneficial, and necessary verbiage that will need to be included in any accepted short sale contract. Once we have an accepted contract with a buyer, we will furnish it, along with the completed financial package, listing agreement, comparable sales information, a copy of a title search that will aid us in figuring out any outstanding liens and the net proceeds, plus any other requested documentation that your lender may require. Then, the follow-up and waiting period begins.

Step #5 – Negotiations with the lender

Once the short sale package is deemed complete, it will be passed from a processor to a short sale negotiator. The negotiator has some authority to accept or counter a proposed short sale. Many times, however, if the net proceeds the contract will generate for the lender fall outside of permissable guidelines, they will need to check with upper management about whether your short sale can be accepted. Additionally, if there is a second mortgage, the same process may apply with that lender, as well, although most of the time, the second mortgage holder agrees to a set amount, usually less than $10,000. These negotiations can potentially take weeks to finalize so all parties need to be patient!

Step #6 – Setting up the closing

As the short sale process progresses and after the short sale has been approved by the lender, we are ready to set up the closing with a closing attorney. Unless specified beforehand, it is usually the right of the purchaser to select the closing attorney. Craig works with numerous closing attorneys and will specify in the contracts the attorneys that will be most advantageous to utilize. All parties will be communicating with the attorney’s office several times prior to closing. Once the property closes (usually within 30 days of short sale acceptance), you will most likely be out from under the home and any encumbrances. We can not guarantee that the lender will forgive all outstanding debt, however, in our experience, this is usually the case (please check with your accountant and/or an attorney to understand the potential liabilities that come with a short sale).


To apply for a short sale, please visit


  Having been licensed since 1994, Craig Levine brings to your real estate deal a world of experience, cutting-edge technology, negotiating savvy, and exemplary service. With Century 21 in Atlanta, Craig was the #2 agent in the #1 office in Georgia in 1998, 1999, 2000, and 2001! He repeatedly received Century 21′s highest honor, The Centurion Award, in each of these years. In 2002, Craig joined Re/Max Greater Atlanta, the Nation’s #1 RE/MAX office and has consistently been one of the top agents in the office. Additionally, Craig got licensed in Florida to bring his arsenal of skills and resources into the Emerald Coast’s 2nd Home and Investment market. He holds a Florida Broker’s Associate License which resides at Baywalk Real Estate in Beautiful Destin, Florida.

     Craig is an avid hiker, camper, boater, golfer, traveler, biker, and reader. He has written for numerous print magazines including The Seasonal, The Gazette, Cobb Living, Cobbonline, The Cobb Times, Atlanta Nation, Cherokee Nation, North Fulton Nation, Gwinnett Nation, The Southeast Business Journal, Lake Lanier Herald, Revue and News, John’s Creek Herald, Forsyth Herald, North Atlanta Business Post, as well as various online real estate related web sites. Craig is also frequently quoted in Georgia Realtor Magazine, Florida Realtor Magazine, the Atlanta Journal and Constitution, and the Atlanta Business Chronicle.

-Realtor Serving Thousands of Clients Since 1994
-Associate Broker in Georgia and Florida
-Graduate of the Realtor Institute (GRI)
-Certified Luxury Home Marketing Specialist (CLHMS)
-Certified Distressed Property Expert (CDPE)
-Accredited REO Agent (AREO)
-Short Sale and Foreclosure Resource Specialist (SFR)
-Real Estate Property Management Specialist (REPM)
-Top 1% of Realtors Nationally
-Non-Performing Asset Specialist
-Member REOMAC (wait list), FiveStar, Equator Gold Certified, AMP Professional Certified, REOConnection, REO Network

RE/MAX Greater Atlanta (Atlanta) – Associate Broker
Southern Disposition, LLC – Broker/Owner
Baywalk Real Estate (Destin/Panama City Beach, Florida) – Broker Associate

678-784-4493 (Office)
888-8-LEVINE (Toll Free)

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