Your Ultimate Short Sale Checklist (2025 Edition)

Why This Checklist Matters

If you’re behind on mortgage payments and worried about foreclosure, you’re not alone, and you do have options. One of the most talked-about (and misunderstood) is a short sale. It sounds complicated, but with the proper prep, it can be a strategic move to avoid foreclosure and limit long-term credit damage.

This guide explains the full process if you want more context before starting.

This checklist breaks down precisely what you need to get short sale approval: step-by-step, no fluff. It’s also built to pair with Short Sale Advisor, a free AI-powered tool that shows you if you qualify and what to do next.

Pre-Short Sale Prep: What to Gather First

1. Understand what short sale approval means
Short sale approval is when your lender agrees to let you sell your home for less than what you owe on your mortgage. They have to approve the deal because they’re accepting less than the full amount due.

2. Confirm you're facing a legitimate hardship
Lenders won’t approve a short sale unless you can show financial hardship (e.g., job loss, divorce, medical bills). Gather any documents that back this up.

3. Pull your mortgage and loan details
Know your remaining loan balance, interest rate, and monthly payment. You'll need these numbers for your short sale package.

4. Estimate your home’s current value
Use recent sales in your neighborhood or a real estate agent’s CMA (Comparative Market Analysis). Lenders want to see that your home is worth less than what you owe.

5. Gather financial documents
Tax returns (2 years), pay stubs (last 2 months), bank statements (2-3 months), and a monthly budget showing income vs. expenses. These prove your hardship is real.

6. Draft a hardship letter
This personal letter explains why you can’t keep up with your mortgage and why a short sale is the best option. Keep it honest and direct.

During the Short Sale Process

7. Talk to a real estate agent who has short sale experience
Not all agents understand short sales. Ask for someone who’s closed at least a few and knows how to negotiate with banks.

8. Submit a complete short sale package to your lender
This includes your hardship letter, financial docs, listing agreement, and an offer from a buyer (once you get one); incomplete files stall approvals.

9. Respond quickly to lender requests
They may ask for more info or clarification. Speed helps; delays can kill deals.

10. Keep the buyer updated and realistic
Short sales can take 30–90+ days for lender approval. Make sure the buyer is patient and committed.

11. Work with your agent to push the bank when needed
Sometimes lenders drag their feet. A good agent will follow up regularly and escalate when necessary.

Post-Approval Follow-Ups

12. Confirm debt forgiveness (if applicable)
Some lenders forgive the unpaid balance, others don’t. Get clear terms in writing to avoid surprise bills later.

Here’s what happens after approval, including how your credit and move-out timeline might be affected.

13. Understand the credit impact
A short sale does affect your credit, but typically less than a foreclosure. It’s often easier to bounce back from.

14. Plan your next housing move
Where will you go after the sale? Whether renting or buying later, start prepping for your transition early.

15. Save all documents from the short sale
Keep digital and paper copies. These may be needed for future rentals, taxes, or loan applications.

Check the FAQ for answers to questions that might come up even after the sale is done.

Try Short Sale Advisor now, and take the guesswork out of getting short sale approval.