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Short Sale Tips


Short Sale:

A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than the current market value and what the property can be sold for.


STEP 1: Identify a Real Estate Professional(s) who is reliable, effective and ethical. TheJNLGroup Real Estate is professional, experienced and informed.

STEP 2: Verify the value of your property. Your Real Estate Professionals, TheJNLGroup, will help you estimate the market value of your property.

STEP 3: Add up all the costs of selling the property. TheJNLGroup will provide an estimated net sheet of closing costs.

STEP 4: Determine the amount owed against the property. This will be the total of all loans against the property.

STEP 5: Do the calculations. Subtract the total amount owing against the property from the estimated proceeds of the sale. On a short sale, this will be a negative number.

STEP 6: Write a “Hardship Letter” addressed to the person with authority. Include a debt to income ratio summary to prove you are unable to afford the payment. Ask for a reduced monthly due. Send the letter by certified mail or fax with a time stamp receipt for proof of delivery.

STEP 7: Follow up with a phone call to the individual in which you wrote the letter. Ask the lender what is their procedures are for a short sale. Some lenders are willing to work with you by reducing the amount owed or making other arrangements.  

STEP 8: Put the property on the market. List with TheJNLGroup; once the initial contact is made, we will be able to contact the lender to help you through the negotiations.

STEP 9: Sell the property.

Tips & Warnings

Closing costs will include title and escrow fees, attorney fees (if any), a portion of unpaid property taxes, re-conveyance fees, notary fees, delivery fees, documentary fees and/or transfer fees, unpaid HOA fees.

Remember that the amount on your monthly loan statement does not include interest. Interest is accrued until the date a loan is paid off, so you may have as much as 30 days of interest on top of the balance owing, and you'll need to include this interest in the total payoff amount.

When a property has sold under a short sale, the lender may require the borrower to make up the difference, through either a personal obligation or a collection. Try to negotiate zero balance.

The IRS often gets involved with short sales, because they are seen as a relief of debt and may be treated as income. Check with your accountant.

TheJNLGroup Real Estate provides this information as a guide. The information provided should not be used as a substitute to talking to a professional tax advisor or real estate attorney about your individual situation.