How to Complete a Short Sale Package

July 21, 2021
short sale package

In my experience, short sales do not make the best real estate investments, especially if you are a new investor. However, if you do choose to buy a short sale property, completing the short sale package correctly can speed up the process.

What is a Short Sale Package?

A short sale is when a lender accepts an amount less than what the homeowner owes on the mortgage to sell the home. It is done when a homeowner can no longer make the payments.

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When you submit an offer for a short sale, you will need to complete a short sale package for the lender. In my investment strategies, I look for motivated sellers that have two mortgages on their home, and I buy the home by discounting (or doing a short sale) on the second loan. 

short sale package

Steps to Completing a Short Sale Package

1. Formulate your offer  

Formulating an offer is the hardest part of submitting a short sale package.

To come up with an offer you need to look at how much the lender would get if the house went up for auction. This will give you an idea of what the lender thinks the property is worth.

Always start with your lowest offer, the lender will almost always counter and you want room to negotiate.

2. Get a checklist from lender

When you identify the lender, you can reach out and ask for a short sale package checklist. It is essential to include everything they ask for on the list.

3. Create a cover sheet 

When you submit a short sale package, include a cover letter that outlines the important parts of the deal. You should mention in the headline that it is an offer to avoid foreclosure. Something like “Offer to Purchase Property to Avoid Foreclosure.” The cover sheet, and every page in the package, should include the account number, name, and address of the homeowner. 

4. Overemphasize the seller’s hardship 

Be very specific about the financial hardship of the seller. For instance, you can mention specific dates of loss of employment or injuries, if the financial loss is due to disability. You can include: 

  • Medical bills 
  • Attorney fees from a divorce 
  • Auto repairs from a car accident 

The more information you can provide, the better your case will be for the short sale approval.

5. Double check the list 

When you are sure you have everything together, check again. It is imperative you include all of the documents the lender asks for. These documents might include: 

  • MLS listing agreement 
  • Offer to purchase 
  • Financial hardship documents 
  • Estimated HUD-1 and comparable home reports
  • Signed authorization forms 

When the package is complete, it might be more than 50 pages. 

Short Sale Package Tips

There are a few things to keep in mind when submitting a short sale package. 

  1. You might choose to mail a hard copy of the package to the loss mitigation or short sale department. Here, you can include photos of property damage that lowers the value of the house.  
  1. Put the package together in an organized and professional looking binder. 
  1. Follow up with the lender to make sure they received the package. If they have, ask them to confirm how many pages to make sure they have everything you sent. 
  1. Ask for an estimated completion date. 

To learn more about how to short sale a second mortgage on an investment property, I invite you to join me at one of my live events or check out my free online courses. 

Marko Rubel
Marko Rubel is a bestselling author, self-made millionaire, and master real estate investor. He immigrated to the U.S. from Croatia as a champion boxer in his 20s without speaking English and having little money.  He has been named a real estate expert by the National Real Estate Investing Association that represents over 40,000 investors nationwide. After years of trial and error in wholesaling and rehabbing, he discovered Unlimited Funding strategies. He is now considered one of America’s leading real estate experts— training others how to be successful exactly as he has done it.