The Short Sale Process: Negotiation

You know? I might just come back and create an illustration for this, just so you can better understand what happens.

Once the appraisal or the interior BPO is returned and reconciled with the lender, there is a 2-3 week review period that the lender will need to process the short sale package and review the offer. After the review period ends, there are three possible outcomes:

1) The lender approves the offer and issues approval letter(s) within a 1 week period.

2) The lender declines the offer, as they feel the offer is too low for the true market value and counters your offer to a higher offer.

If this happens the lender will give you a time frame to reply by (normally within 2-4 business days). Please respond quickly or lender may close the file and then file will need to be reassigned to a new negotiator, which delays the file by weeks.


If the buyers are willing to increase their offer, please draft an addendum and submit it to OHS with all parties’ signatures. My team will submit the buyers increased purchase price to the lender for the new decision.

- Please allow 1-2 weeks minimum to hear from the lenders if the buyer’s higher offer was accepted. (Please keep in mind that anything less that what lender counters needs to be approved by managers and investors).

- If the counter is accepted, lender will issue approval within 5 business days.

- At this point, lenders may reduce commissions or decline to pay fees, OHS will notify you if this occurs.


3) The lender declines your offer and does not counter you.

This happens when the offer was so low and the lender feels that this was a “low ball” or “fishing” offer. File is closed and you have to start the process all over. This is a perfect example why “low ball” offers should not be submitted to a lender.



We always requests that a full satisfaction of debt is approved, HOWEVER lenders have the right to allow a lien release only, require a promissory note be signed by the sellers, or not fully release the debt and charge the remaining balance off as a collectable balance.

If any of these items occur you will be notified. We tend to see that a full satisfaction of debt may not be approved for non-owner occupied properties or properties where the sellers have obtained a cash out refinance.

Always recommend to your client to contact a tax professional with regards to the possibility of adverse tax implications that might be associated with a short sale.

All of the negotiation will be handled exclusively by my team (in the event, of course that you elect to use our services).


AGENTS - DO NOT interfere with this process as it angers the lenders and make the lenders less likely to work with you on a file. Remember, lenders will only allow one main contact per file!

Node the bold and italics? Important stuff, that. In my experience, nothing gums up the works more than too many cooks in the kitchen....did I just mix my metaphors? Hope not.


This process of negotiation is the same process for EACH lien on a property. This means first, second, third mortgages, judgments, IRS liens, HOA back dues, etc.. The time frame may increase substantially as each lien must approve in writing the others transaction.



Nick.