KW Default Solutions
A short sale is a sale for less than the owner owes, and the lender or servicer has to approve it. The servicer is the company that handles the loan day to day. CFPB: What is a short sale? If you are new to short sales, the waiting stage is where it is easy to feel stuck. You cannot speed up the review or promise a decision date. You can keep the file moving by knowing what is outstanding, who can answer, and what you can do today.
First, confirm what the servicer received
Keep the confirmation from the portal or other submission method. Then check that the documents arrived, can be read, and went into the right file. Ask how the servicer will tell you about missing items. If a representative says the package is complete, write down what they said and which review it covers.
"Sent," "received," "complete" and "approved" are four different things. A signed offer between buyer and seller is yet another. It does not give you the servicer's approval of a reduced payoff.
What the reviewer may look at
Depending on the loan, the reviewer may look at the owner's situation and records, the property's value, the offer, the costs, and the money the lender would receive. An investor or insurer may have a say too. Fannie Mae's guide, for example, covers borrower records, value checks, offer responses and other mortgage liens for its loans. Those rules apply to that program, not to every short sale. Fannie Mae Short Sale
The reviewer may ask for a missing page, a fresh income record, a signed form, or an explanation of a number. Treat it as one specific item, not a reason to resend everything. Check the period, format, deadline and route, decide who handles it, and record the version you send back. If the same item is requested again, compare what was asked with what was sent before assuming the file was lost.
A broker price opinion (BPO) is an agent's or broker's opinion of what a property would sell for. An appraisal is a different valuation service. Which one the lender uses depends on the file. Give the person preparing it facts, such as clear photos, similar sales and the reasons this home differs. Do not pressure them toward a number. If you think a key fact was missed, record it and ask how to get it reviewed.
If the only status you can get is "under review," write that down. Do not guess that approval is close.
Checkpoints you may track (the order varies by file)
Receipt
- Package complete
- Offer submitted and receipt confirmed
Review
- Servicer reviewer or negotiator assigned (the person at the servicer who works your file; job titles vary)
- Valuation ordered and completed
- Missing items cleared
- Investor or insurer review complete
Approval and closing
- Approval issued
- Second mortgage and other liens resolved
- Buyer financing cleared
- Closing completed
These are checkpoints, not a schedule. The groups only help you sort them. Several can be in progress at once, a file may skip some, and none comes with a promised date.
When the answer is a counter
A response can ask for a higher price, more money for the lender, or changes to costs or credits. Read exactly what changed before you call anyone. Ask:
- Is the change to the price or to the amount the lender must receive?
- Is a particular cost or credit being questioned?
- Does another lender's settlement need attention?
- Who has to agree, and what written response is needed?
You cannot accept a change for everyone. Buyer terms need the buyer's agreement, seller decisions belong to the seller, and legal consequences need an attorney. A verbal counter is not a final approval. When the offer changes, update the contract and the closing estimate so they agree.
A higher price is not the same as a higher net
Here is a made-up proposal. All amounts are invented, and the selling costs do not include the separate second mortgage payment shown below.
| Proposed use of sale money | Fictional amount |
|---|---|
| Sale price | $250,000 |
| Selling costs | $20,000 |
| Proposed second mortgage settlement | $3,000 |
| Proposed proceeds to first mortgage lender | $227,000 |
The math is $250,000 minus $20,000 minus $3,000, which leaves $227,000.
Now suppose a new $5,000 buyer credit is proposed and is not already in those costs. With everything else unchanged, the first mortgage proceeds fall to $222,000. The buyer's offer still says $250,000, but the lender's proceeds changed. If the review requires $227,000, the deal no longer matches it.
The answer is not to hide the credit, leave it off the statement, or arrange a payment outside closing. Bring the parties and the closing professional together and handle the change in writing.
Keep every lender and claim on your list
Approval from the first mortgage lender does not, by itself, settle a second mortgage or any other lien. Track each one separately: the proposed payment, the response, the written terms, the deadline and the contact. A title or closing professional can tell you what must be cleared to close, and an attorney handles the legal questions. Never hide a payment or side arrangement.
The buyer's loan, inspections, deposit and deadlines usually keep running while the review is open. Check the contract. Check that the buyer is still ready, watch deadlines before they pass, and handle extensions under the contract and your brokerage's guidance. If you have a backup buyer, follow the contract, MLS, broker and lender rules, and do not describe a backup as first in line when that is not their position.
A short sale request is not a foreclosure stop
A short sale request does not, by itself, show that foreclosure has paused or a sale date has moved. Track notices and status with the proper contacts, and send legal questions to an attorney. Foreclosure rules vary by state. If a postponement is requested, record the request and the response as two different events. "Requested" is not "granted." Keep urgent dates visible, and help the owner reach qualified advice.
When approval arrives
Read the whole written decision and give it to the closing team and the right professionals. Check the property, loan and buyer, the price, the money the lender must receive, allowed costs, conditions, the closing deadline and the expiration date. List any releases still needed from others. If the price, credits, buyer, costs or closing date change, ask whether renewed approval is needed. Do not assume an extension exists until you have it in writing.
An approval may not answer what the owner will still owe. A deficiency is a remaining unpaid amount, and the CFPB says to get any waiver of it in writing. CFPB: What is a short sale? Deficiency rules vary by state, so an attorney should review what the documents mean, and a tax professional should answer tax questions.
Use six lines for every update
- Current checked stage: What the evidence shows.
- Last change: What happened since the last update.
- Outstanding item: The specific request or decision still open.
- Responsible person: Who handles the next action.
- Next check: When or how you will check again.
- Other deadline: Any contract, approval or verified legal date that needs attention.
Keep private money details out of updates to people who are not allowed to see them. You can tell a buyer a document is missing without sending the owner's account statement.
Here is a fictional example: "The package was received. An updated statement is required, and the homeowner is getting it through the secure channel. Receipt will be checked after upload. No written decision has been received, and the buyer's contract extension is a separate task."
Send your next update in these six lines, even when the news is that no decision has arrived.
Questions? Ask our team through the KWDS contact form.
KW Default Solutions is a resource for licensed agents who are new to distressed-property work. This article is general education, not legal or tax advice. Requirements vary by file and by state.