The Complete Short Sale Process From A to Z

Even after all these years, the short sale process remains a mystery to many people. Distressed sellers are puzzled and desperate for some guidance from a short-sale agent. Even more confusing… most real estate agents in Orlando don’t know how to do a short sale.

What’s a Short Sale?

A short sale is a situation that occurs when a mortgage lender agrees to accept a lesser amount than what’s owed on the outstanding mortgage balance. This situation benefits both the lender as well as the seller [homeowner] when foreclosure seems unavoidable.

By agreeing to a short sale, the lender can avoid a long drawn out and costly foreclosure process. Because even if the bank forecloses, there’s no guarantee that it will sell at the auction in which case the lender would end up back with the property as an REO [real estate owned] property. If the lender keeps the property, they will ultimately have to put it up for sale again, and there’s no telling how much they will get or how long it will take.

The dollar amount offered on a short sale is often more than a lender would receive at the auction or as an REO listing. However, you should know that banks are never thrilled about releasing mortgage obligations at huge discounts either.

The Seller

There are 2 main reasons why lenders grant short sales. First, the homeowner is going through a financial hardship and cannot continue paying the mortgage. Secondly, there isn’t enough equity in the property to pay off the mortgage and closing costs, taxes, etc. Both of these conditions must exist for a bank to approve a short sale.

A few examples of financial hardship may include loss of employment, reduction in income, divorce, medical condition, job transfer, bankruptcy, or even death.

Sellers must prepare a financial package so they can submit it to their lender. Every bank has a different short sale package but the basics are the same among all lenders.

The Short Sale Package

Following are the main components of a typical short sale package:

  • Authorization Letter: This is a document which allows your short sale agent to speak with your lender on your behalf.
  • Hardship Letter: A detailed letter describing the hardship the seller is going through explaining why they can no longer afford the mortgage.
  • Preliminary Closing Statement: Discloses the contract amount, realtor commissions, closing costs, taxes and any other fees involved with the transaction.
  • Financial Statement: A statement which discloses your income versus your expenses.
  • Two years of your tax returns
  • Two years W-2s
  • Last two bank statements
  • Two months of pay stubs
  • CMA: This is a report prepared by your short sale agent which lists recent sales of comparable homes in your area.

Submitting an offer to the Bank

Before submitting a short sale offer to the lender, buyers should ask their real estate agent for a list of comparable properties. The lender will look to get an offer that’s close to market value.

It’s important to keep in mind that the listing price on a short sale may not reflect the market value. The property will most likely be lower than market value to entice more buyers to make an offer. Most short sales begin when there’s a signed and accepted purchase offer by the seller and buyer.

Keep in mind that the short sale listing price might not reflect market value. The property might be priced below comparable sales to encourage multiple offers. Some short sales can begin before an offer but banks will most often start the procedure upon receipt of an accepted purchase offer.

Once the seller accepts the offer, the listing agent will then send the listing agreement, signed purchase offer, and proof of funds to the bank together with the completed short sale package.

If the package is incomplete, the lender won’t even process it. This is why it’s so important to have an experienced short-sale agent representing the seller.

The Short Sale Lender

Short sales are anything but short… buyers can end up waiting several months to get a response from a lender. The short sale listing agent must follow up with the bank regularly and keep detailed notes of each contact. Being a short sale agent in Orlando since 2004, I can tell you that following up regularly with the lender is crucial to the success of a short sale transaction.

I can’t tell you the number of times a buyer has decided to cancel their offer because of the bank taking too long to respond. This is especially true when the buyer needs to buy a house ASAP. For buyers wanting to close quickly, a short sale may not be the best option for them.

The Usual Process

Once the lender receives the completed Short Sale package, this is usually what takes place on the bank’s end:

  • The loss mitigation dept acknowledges receiving the completed package. This alone can take between 1 – 3 weeks.
  • A short sale processor is assigned to the file, this can also take up to a week or two.
  • A BPO aka [Broker’s Price Opinion] is ordered. The lender will contract a local realtor to give their opinion on what the property is worth. They do this by looking at the comparable properties in the area and are supposed consider any repairs the home may need.
  • Another short sale processor maybe assigned to the file. This can add another week or 2.
  • A second short sale processor might be assigned. This can take another 30 days.
  • The offer is either denied or accepted. If the offer is denied, the bank will counter with the amount they are willing to accept. At this point the buyer may wish to counter the bank’s offer together with a contractor’s estimate and a CMA.
  • Once the bank has accepted the offer, the lender will require all parties in the transaction to sign an arm’s length affidavit. This document states that parties are unrelated and acting their own best interest.
  • The lender will send out a short sale approval letter approving the contract amount.

While all this is going on, sometimes buyers will give up hope and cancel. They become tired of waiting because the short sale process is taking much longer than they expected. I’ve had situations with clients where buyers just walk on the deal without even telling their real estate agent.

I’ve had some Orlando short sales get approved in two weeks and others take more up to 6 months on average. A top short-sale realtor can help speed up this process, but at the end of the day, it’s all up to the lender. Some lenders are easier to work with than others.

It’s crucial that the short sale agent check-in with the short sale bank at least once or twice a week. Unfortunately, there are many incompetent short sale processors and the short sale agent may have to go over the processor’s head or request an “escalation”.

Final Thoughts

A good short sale listing agent will often have a good idea about when approval will come after the file has been sent for the bank’s final review. If so, the buyer would be wise to start the loan process if they haven’t already. Occasionally, banks will only give buyers 2 weeks to close so it’s important to be ready.

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Can You Negotiate The Price of a Short Sale?

Short sale deals in Orlando can mean big savings for home buyers and investors who are experienced with the process. Short sales can be very time-consuming and require a lot more work than a regular sale, but if you’re willing to hang in there, you could end up with a fantastic deal on a home.


In case you don’t know, a short sale is the sale of a house whereas the mortgage company allows the homeowner to sell the property for an amount less than what’s owed on the note. Because of this, short sales are very popular for homeowners who are no longer able to afford to pay their mortgages. This also allows banks to get most of their money back and avoid taking a homeowner through an expensive foreclosure process.

A short sale is also much better for the homeowner because it allows them to avoid having a foreclosure on their record which is very damaging to your credit score. The short sale process can be beneficial not only for lenders and homeowners but also for potential buyers… if they’re willing to stay the course no matter what.


Short sales are all about back and forth negotiations, but they are anything but short. It can be a very time-consuming process and there’s never a guarantee that the lender will approve your offer. Lenders are not required to accept any short sale offer on any property. To negotiate a successful short sale, you must be familiar with the process.


These days, very few first short sale offers are accepted so don’t get your hopes up. Your ability to negotiate will have a lot to do with what the final accepted price will be.

Very few initial short sale offers are accepted, and for those that are,
there is a large amount of negotiation involved. Your ability to negotiate will often determine the final price that is accepted. Check out the following tips to help you put your best foot forward:

Look at the comps: You must know how much the house is worth so that you know you’re getting a good deal. You should enlist the help of an Orlando real estate agent to help you with this as they have access to the MLS and other tools. Submitting a lowball offer is the quickest way to get rejected while offering too much can cause you to lose money. That’s why having a real estate agent in your corner is vital.

Submitting the 1st Offer: Assuming the homeowner has already been granted permission to short sell their home, the negotiation process begins when you submit your first offer. If the property requires repairs, then you should include a contractor’s estimate with your offer. This is done to justify your offer and also lets the lender know the home needs work.

The Short Sale Agent: Hopefully the listing agent that’s doing the short sale for the seller has some experience processing short sales. If not, then you might be headed for trouble, and unfortunately, there’s nothing you can do about it because it’s up to the seller to choose the listing agent.

The BPO aka [brokers price opinion]: After the offer’s been submitted, the lender will order what’s called a BPO. This is usually performed by a local real estate agent of the lender’s choosing to determine what the fair market value of the home is. Whatever this number comes in at will usually determine what the lender is willing to accept. However, sometimes [most of the time] this number will still be a bit higher than it should and so the negotiations begin…

The Counter Offer: If your first offer was accepted, either you offered too much or you are really lucky! Hopefully, it’s the latter…but not likely. Most of the time, the 1st offer will be rejected and the lender will either… tell you how much their willing to accept or they may tell you to submit your final highest, and best offer. At this point, you should tell your realtor to do the comps again before submitting your final and best offer. How the short sale agent handles this will have a lot to do with your chances of success.

Short Sale Tips From a PRO

In my career as an Orlando Real Estate Agent, I’ve completed thousands of successful short sales in Orlando and throughout the state of Florida. I can tell you that processing and negotiating a successful short sale requires skill, experience, tenacity, and most of all patience. To give yourself the best chance at getting a deal, here are some tips:

  • Work With An Experienced Short Sale Agent: Whether you’re looking to buy a short sale or do a short sale on your own home, you should do so with the representation of a real estate agent experienced in short sales. Take your time in finding the right agent as this part is crucial to your success.
  • Have Your Funding in Place: Sometimes lenders will only give you 2 weeks to close on an approved short sale property. You should have your financing in place before you even start submitting offers.
  • Start The Loan Process Early: While not always the case, some banks will offer a small closing window to those looking to secure a short sale (sometimes as little as two weeks). Those that have yet to secure funding may find that the window is too short. Therefore, it’s a good idea to get the ball rolling on financing as soon as possible—perhaps even before the file is sent for final review.
  • Follow up, Follow up, Follow up: Be sure to maintain constant contact with your real estate agent to be aware of what’s happening with the file.


Short Sale

Short sales in Orlando have served as some of the best deals since 2007 and still do so today, although it’s a bit more competitive now in 2019. However, if you’re willing to put in the work and stay the course, it could mean a big payday for you!

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Why Use A Short Sale Specialist?

Most Realtors in Orlando won’t touch a short sale file while others… even though they’ve never done a short sale… refuse to ask for help which can seriously hurt a homeowner’s chances at selling their home via short sale.

As the leading short sale experts in Orlando, we take on all short sale listings, even the ones that other agents want no part of. You see, it is one thing to process a short sale with just one lender but when you have to deal with multiple lenders and or liens attached it becomes a whole other ball game.

A short sale specialist should know everything there is to know about the process and everything else that goes into facilitating the entire transaction. The agent should be aware of everything from foreclosure postponement, lender guidelines, and the latest state short sale regulations. There’s no situation that should arise that’s is beyond your short sale agent’s comprehension.

Cash Back To Seller Programs

Even though your lender is accepting a loss on what’s owed to them, many times we’re able to get our short sale clients anywhere from $3,000 to $30,000 back at the closing for relocation costs. A short sale agent should be up-to-date on all the various cashback to seller programs offered by different lenders. If they aren’t aware of this it could cost the homeowner thousands of dollars when they need it the most.

How Does A Short Sale Agent Get Compensated?

In a typical short sale transaction, the lender pays the real estate commission from the sale price. Some agents will try to put a short sale processing fee on the CD [Closing Disclosure formerly as the HUD-1] but it must be approved by the lender. You should never, ever pay a real estate agent prior to doing your short sale. Only attorneys are legally allowed to charge an upfront fee to complete your short sale.

If you’re in a situation where you need to do a short sale on your home, be sure to hire a proven expert in order to give yourself the best chance at making the sale happen. For a free consultation with one of our Orlando short sale experts visit or call 407-902-7750.

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Orlando short sale Condo | 6451 Old Park Ln #108

 Orlando short sale Condo | 6451 Old Park Ln #108

This 1st-floor condo is located in Ventura at Stonebridge Commons. It’s a 1,247 sq ft. 3 Bedroom 2 Bathroom unit that’s in excellent condition and move-in ready. This is a must-see unit that is priced for a quick sale, so don’t wait!

Other features worth noting

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This unit is conveniently located close to shopping, transportation and entertainment.

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What happens when an Orlando Short Sales get approved for more than appraisal value?

When a buyer puts in an offer on an Orlando short sale property, that person believes that they are getting a great deal. Many times this ends up being the case and after several months of waiting…the bank approves the offer but don’t celebrate yet,…  there are still a few things that can make the deal fall apart.

The appraisal is a crucial and unavoidable part of this process. let’s say for instance that the bank approved your short sale offer of $100,000.00, the next step is to get your financing in line which means getting the property appraised, inspected, etc. The issue now is to get the property to appraise for at least the amount of the contract. If the property falls short on the appraisal, let’s say $95,000.00, then there’s a problem because your lender is not going to approve a loan for $100,000.00 for a house that just appraised for $5,000.00 less.

How and why does this happen?

Appraisers have to go off of recently sold properties only, not pending properties, or active properties. So even though the BPO may have come in at a higher valuation, the reason is that BPO agents have a bit more leeway on what comparables they are able to use. As opposed to appraisers, BPO reports may include active listings, pending listings, in addition to sold listings in order to determine true valuation.

Will the short sale lender adjust the approval price to match the appraisal price?

Most lenders will actually change their payoff letter so that the deal can go through. As a matter of fact, this is something that happens all of the time in our office. The only drawback is that it takes a bit longer because there’s a process which typically 2 to 3 weeks. It all comes down to how much of a hurry the buyer is in to buy the house. If the buyer is in a position to wait the extra time, then this actually benefits them because they get an even better deal than the original price.

Lenders like Fannie Mae for instance are less likely to lower the approval amount regardless of the appraisal value. I know what you’re thinking and I agree… It makes no sense.

What happens if the lender is unwilling to adjust the approval price?

There are a couple of different scenarios that may ensue if the lender doesn’t want to lower their payoff amount. One thing that can happen is that the buyer walks away and keeps looking for another Orlando short sale. Another way to get around this issue is if it’s a cash buyer that really wants the property. However, not too many people will purchase a property for more money than the appraised value unless it holds some kind of sentimental value for them.

Need help with a short sale? Call our office at 407-902-7750

Orlando short sale expert

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