What’s in a Short Sale Packet?

Once a Seller has decided to negotiate for a short sale, the next step is to know what goes into the Short Sale Packet because the majority of the information to be included will come directly from the Seller. Therefore the Seller must be cooperative and willing to undergo the data gathering process, which can be time consuming and often frustrating. It’s also important to note that each Lender has specific package requirements and it is imperative that the package be submitted accordingly. The following are items to be included in the Short Sale Packet as a request for consideration of short sale:

• Short‐sale cover letter – this is a one page overview of what you are requesting  and what is contained in the packet.

Authorization Letter– this gives the Lender permission to provide information to the Agent pertaining to the Seller’s mortgage

 • Seller’s financial information:

  • Most recent pay stubs – 2 months (for W-2 wage earners)
  • Most recent Bank Statements – 2 months, all pages
  • Information regarding employment – length of service
  • Profit and Loss Statement/Audited YTD Income Statement – (if Self employed)
  • Income and Expense Sample Form
  • Most recent (2) years’ Completed Tax Returns –(personal and/or Business, all signed pages)
  • Four (4) months Business & Personal Bank Statements –( if Self employed)
  • Asset documentation – i.e. Savings accounts, Stocks, Bonds, CDs, 401K, Pension plans, other Retirement funds (all pages)
  • Supporting financial hardship documentation – i.e. medical bills, unexpected expenses
  • Copy of Insurance Declaration page
  • Recent property tax bill – proof of payment
  • Proof of payment of Homeowner’s Association Fees (if applicable)
  • Rental Income with Agreement if non-owner occupied
  • Completed, signed and dated Request for Consideration of Short Sale Form from Lender
  • Completed 4506T-EZ, signed and dated – form allowing the Lender to get a transcript of filed Tax Return

• How to Write a Hardship Letter – this is a letter explaining how and why the Seller became delinquent on payments.  This should be sincere and honest.

 Information from the Agent:

 • Listing Agreement

• Marketing history – MLS printout (with appropriate language and disclosures for a short sale) showings and feedback reports

• Repair estimate for the property, if repairs are required

• CMA -with supporting sales history, including REO comps

• Purchase contract signed by both the buyer and seller

• Copy of Earnest Money Check

• Written proof of the buyer’s ability to purchase the property (preapproval letter, or proof of funds, if cash transaction)

• HUD‐1 settlement statement (sometimes Title company will prepare)

• Preliminary title report

If there is more than one loan on the property, the process has to be repeated and payoffs provided to each lien holder.

To avoid duplication, sometimes agents wait till after they have an offer to submit the packet, since the Lender wants current docs from the contract date.

If you would like to discuss the possibility of a Short Sale, please feel free to contact me at:

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  1. Anna Bass says:

    This is an interesting topic. We’re always looking for valuable resources to share with clients and my colleagues, and your piece is definitely worth sharing!

  2. annastout says:

    Thanks so much Anna. I like your glossary.

  3. I’m a Texas agent myself and specialize in Dallas short sales. Interesting post, thanks for putting it together. The market is a mess out here right now as well, but short sales do still seem to be the best alternative to foreclosure for most home owners

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