Short Sale Transaction Overview for Buyer and Seller

Posted by on Jul 10, 2012 in Memos | Comments Off on Short Sale Transaction Overview for Buyer and Seller

(This is a general overview and for informational purposes only.)


Thank you for considering our services to be closer of your home purchase or sale. This home is a short sale transaction and quite different than a normal buyer and seller transaction. Please be aware there are some monetary risks associated with this transaction for the buyer, such as the inspection and appraisal fees.


Once all parties sign the purchase and sale agreement, we must submit a completed “short sale package” to the Seller’s lender(s) for their approval. In this package, there will be a copy of the purchase and sale agreement, the Buyer’s pre-approval letter from its lender, a listing history of the property, a preliminary settlement statement and many other financial documents that we have collected from the Seller.

The Seller has no control over the offer or its approval once the file is submitted.

The Seller cannot receive any proceeds from the sale. The lender typically does NOT allow any utility holdback for payment of utilities at closing. Depending on each situation be aware there may be a water/sewer lien that the Buyer will be responsible to pay.

Our goal on every short sale is to submit the “short sale package” as soon as possible. Owing to the volume of “short sale packages” received by the lender, the lender may not upload the “short sale package” from us for 20-30 days.

When the lender receives their opinion of value, we will be assigned a loss mitigator/negotiator or work-out specialist. This person will be our primary contact throughout the approval process.

We will call weekly, but seldom will we actually get to talk to the negotiator. This file will sit in the order of the date received by the negotiator. As we receive news on the file, we will email your broker with any and all updates. There will be long periods of time where it may seem that nothing is being done, but be assured we are doing everything possible to expedite this file.

The negotiator will eventually submit the file to the investor and/or mortgage insurance company for approval. The investor usually does not take very long to make a decision once the complete package is received.


Once we receive the approval letter in writing, the Seller’s lender typically allow at most  between 30 and 45 days to close the transaction.

The Buyer must do any inspections necessary to satisfy itself as to the condition of the property within the specified time on the Purchase and Sale Agreement.  Please have your Buyer’s lender on notice to order the appraisal immediately upon short sale underlying lien holder(s) approval (if this has not already been completed), so we can close within the allowed time frame.

Based on our, experience it is taking about 60-90 days after the package is submitted to the underlying lien holder(s) before we receive an approval letter. It can take longer and we have no guarantee this file will be approved. Please be assured that we will do all that we can to get approval, but the investor has the final say.

We look forward to working with you and your agent towards a successful closing.


The following articles are published for informational purposes and not for the purposes of providing legal advice. Please contact Galvin Realty Law Group at 425.248.2163 for a consultation about your specific needs and circumstances.