How To Prepare A Short Sale Package

When a homeowner has gone to their lender to seek permission to do a short sale on their home, the lender will ask for what is called a short sale package. The package consists of financial documentation of your hardship as well as a hardship letter explaining how your situation came to be. Your lender requires this package because it helps validate your hardship and gives the lender a better idea of what is really going on.

You should know that your short sale specialist Realtor will help you with preparing your short sale package, but you will need to gather all of the appropriate information. Depending on your lender, your short sale package may vary, meaning, lenders have their own specific acquired documents in which they may ask you to provide. Typically, your short sale package will contain the following documents:

●Letter of authorization

●Short Sale Hardship Letter

●Preliminary net sheet

●Tax returns


●Payroll Stubs

●Copies of bank statements

●Comparative market analysis

In your letter of authorization, you will need to give your short sale Realtor permission to help you through your short sale process. This letter will state that your lender will be allowed to discuss your personal information with your agent as well as reach negotiations. Be sure to include the following in your letter of authorization:

●Your name

●Your Realtor’s name and contact information


●Your loan reference number

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Your short sale hardship letter could be a bitter-sweet moment for you. This letter will give you the opportunity to explain the series of events that led you into you hardship and all that you have done to try to get out of it; your short sale hardship letter is a valuable piece to your package. Examples of typically accepted hardships would be:



●Loss of job

●Relocation or job transfer

●Death of a family member

●Active Military


Keep in mind that your lender is trying to find out if a short sale is what you NEED not what you WANT. Some examples of what will not be an acceptable hardship would be:

●Unhappy with your home- If you have become fed up with your neighbors or neighborhood, or you just are not happy with your home anymore, this does not constitute as a legitimate hardship in the eyes of a lender.

●Purchasing another home- If you have added an additional child to the family and feel that your home no longer suits your family, than this too, is not an acceptable hardship.

●Poor purchase decisions- If a homeowner is claiming hardship due to unnecessary spending.

Again, your short sale specialist will be able to help you with the preparation of your short sale letter of hardship.


In your preliminary net sheet (HUD1) you will proved an estimated net result of the following:

●Cost of sale

●Expected sale price of your home

●Unpaid loan balances

●Outstanding payments and late fees

●Real estate commissions and other sale fees

Your preliminary net should is typically prepared by your short sale specialist.


Tax returns, W-2’s, and payroll stubs are asked to be provided because this will show proof of your inability to meet your debt obligations. Your recent bank statements will allow the lender to see your deposit and withdrawal activity, but do keep in mind that if there are large cash withdrawals or deposits, you will need to explain these items in your short sale package. Your comparative market analysis will provide your lender with the fair market value of your home and homes around you; your short sale specialist will prepare this.

Finally, your short sale specialist will provide your short sale package to your lender. Making sure you short sale package has prepared correctly is a great start to your short sale. Should any paper be left without a name, the date, or a loan number, the short sale process could be delayed or even rejected. Your agent will play a significantly important role in the short sale process; they will handle all negotiations on your behalf while also making sure each request from your lender is met. Remember, when you are looking for the right short sale Realtor, experience, skill and knowledge is highly important. Our agents are the best at what they do and know how important it is to make sure your short sale process is a smooth transition for you.

Ask a local short sale specialist!