The Short Sale Process: What Every Real Estate Agent Should Know
- Oasis Singleton
- 4 days ago
- 2 min read
California is seeing a measurable uptick in short sales, though the segment remains small. In 2025, short sales accounted for just 0.5% of all local home sales, yet this marks a 142% increase compared to the prior year (Sacramento Appraisal Blog). In some regions, volumes have tripled — for example, one area jumped from 9 to 27 listings year-over-year, a 200% increase (Sacramento Appraisal Blog).
In certain markets, volumes have tripled, signaling that agents who master this niche will have an edge over their competition. At AIDE, we get to see the begginng of trends as our team often begins working on transaction prior to them even hitting the open markert. We have seen a 500% increase in short sales this year.
This growing trend, while still niche, signals that agents must prepare now to manage these transactions effectively.
What Is a Short Sale?
A short sale occurs when a property is sold for less than the remaining mortgage balance, with lender approval. While it benefits sellers and lenders alike, it can also create delays, multiple rounds of negotiation, and confusion if agents are not prepared.
Unlike traditional deals (see Breaking Down the Steps of a Smooth Real Estate Transaction), short sales add layers of approval and lender requirements.
Gaining Authorization to Speak with the Bank
Agents cannot communicate directly with the bank until the seller signs an Authorization to Release Information form. This is a critical first step and often requires agents to carefully explain the process to their clients. Collaboration with you client, during what may be mutliple phone calls to their mortage company may be necessary.
Stages of the Bank’s Short Sale Process
While every lender varies, here’s the typical progression:
Authorization – Bank approves communication.
Financial Package – Seller submits hardship letter, income/expense reports, and tax returns.
Offer Submission – Purchase contract and HUD-1 are delivered to lender.
Valuation – Lender orders a Broker Price Opinion (BPO).
Negotiation – Bank decides to accept, reject, or counter the offer.
Approval Letter – Bank provides terms, conditions, and closing timeline.
Agents must prepare for weeks (sometimes months) of delays.
Common Pitfalls to Avoid
Multiple Liens can stall or kill approvals.
Slow Bank Responses can drag timelines.
Buyer Fatigue can cause deals to collapse.
Moving Goalposts—lenders may request new documents late in the process.
Timeline Extensions-most bank require an offer in hand to start most of the processes of a shortsale. Expect 3 to 6 months of escrow.
Why Agents Need to Prepare Now
Even though short sales are currently a small share of the market, their growth rate—142% statewide, up to 200% regionally—shows a clear upward trend. Agents who build short sale knowledge now will be ready to serve sellers who find themselves underwater in the coming years.
For agents ready to take the next step, don’t miss our article:👉 Winning & Managing Short Sale Business: 7 Strategies Every Real Estate Agent Should Master
Short sales are back on the rise, and though they remain complex, agents who master the process will capture more business and gain long-term client trust.
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