The Short Sale Process at the Bank

Buyers may wait a very long time to get a response from the bank. It is imperative for the listing agent to regularly call the bank and keep careful notes of the short sale process. Buyers may get so tired of waiting for short sale approval that they may feel the need to threaten to cancel if they don't get an answer within a specified time period.

That type of attitude is self-defeating and will not speed up the short sale process. If buyers are the type with little patience, perhaps a short sale is not for them.

The following is a typical short sale process at the bank:

  • Bank acknowledges receipt of the file. This can take 10 days to a month.

  • A negotiator is assigned. This can take a week to 60 days.

  • A BPO (Broker Price Opinion) is ordered. The bank probably will refuse to share the results of the BPO.

  • A second negotiator may be assigned. This can take another 30 days.

  • The file is sent for review. This can take 2 weeks to 30 days.

  • The bank may then request that all parties sign an Arm's-Length Affidavit.

  • The bank issues a short sale approval letter.

Some short sales get approval in 2 to 8 weeks. Others can take 90 to 120 days, on average. The length of the short sale generally depends on the investor, not the bank.

The seller will need to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines but  the basic procedure is similar from bank to bank.

The seller's short sale package will most likely consist of:

  • The contract (the agreed upon terms between the Buyer and the Seller)

  • The listing agreement (contract between your Real Estate Agency and the Seller)

  • A hardship letter (explanation why you need to sell your home)

  • Recent bank statements (usually two months)

  • Recent pay stubs (usually two pay periods)

  • Recent tax returns (usually two years)


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After the seller accepts the offer, the listing agent will send the following items to the bank:

  • The listing agreement

  • Executed purchase offer

  • Buyer's pre-approval letter, copy of earnest money check and proof of funds

  • Seller's short sale package

If the package is incomplete, the short sale process will be delayed. In this event, the bank might even shred the package.