Short Sale

What this option is

A short sale applies when the property is worth less than the mortgage balance. The servicer and investor must approve accepting less than full payoff. It resolves the debt without a foreclosure on your record and often produces relocation assistance, but it requires a full financial package and patience.

How it works

1. 1

   You document a hardship and demonstrate that you cannot sustain the loan and that the property is worth less than the balance.

2. 2

   You list the property and obtain a bona fide arm's-length offer from an unrelated buyer.

3. 3

   You submit a short sale package with the purchase agreement, HUD-1 or estimated settlement statement, and your financial documentation.

4. 4

   The servicer orders a valuation, then the investor and any mortgage insurer review the offer against their loss thresholds.

5. 5

   If approved, an approval letter issues with conditions, a closing deadline, and terms addressing any deficiency.

Eligibility considerations

These are the factors servicers weigh. They are considerations rather than a guarantee, and investor rules vary by loan type.

• The property is worth less than the total secured debt.
• A documented hardship that makes the current payment unsustainable.
• An arm's-length transaction, meaning the buyer is not a relative, business partner, or straw purchaser.
• Junior lienholders willing to accept a negotiated payoff, since each holds veto power in practice.
• No competing requirement to complete a modification review first under the investor's waterfall.

Required documents

Submit every page of every document. Incompleteness, not ineligibility, is the leading cause of denial.