Short sales require different paperwork than a normal home sale. In some instances, as mentioned above, your bank may have already qualified you for a short sale. In other cases, you and your agent will need to submit certain paperwork to your lender.

Your lender then decides whether or not to approve your request for a short sale.

Just what goes in a short sale package? Each lender is different, but in general, you will need:
HUD-1 or preliminary net sheet

Completed financial statement

Letter of authorization to let your agent speak to the bank

Letter that explains your financial hardship

Two years of tax returns

Two years of W-2s

Last two months of bank statements

Recent payroll stubs or other proof of income

Comparative market analysis or list of recent comparable sales
Keep in mind that banks’ processes vary, and the above list is a general representation of what many will want to see.

New federal guidelines shorten the wait

Finding an experienced real estate agent to guide you through your short sale is extremely important. When interviewing potential agents, ask about experience specific to the short sale process in your area.

In the past, the notoriously long waiting game for short sales deterred many buyers from attempting them.

But times have changed. Many banks have streamlined the process and removed the barriers that have hamstrung short sales in the past. Some are even prequalifying borrowers to get the ball rolling faster.

In addition, federal guidelines have helped shorten the wait for mortgages owned by Fannie Mae and Freddie Mac. These are great changes for buyers and sellers, because it means there are regulations in place to help shorten the process.

A short sale may be a great option for you. The key is to find an experienced agent who can help you pursue the purchase or sale with confidence.