What is a short sale?

Simply put, a short sale occurs when a lender agrees to take less than the amount that is owed on a piece of property. Types of properties can include primary residences, vacation homes, rental homes and vacant land. The benefit of a short sale occurs when your net proceeds from a short sale are insufficient to cover your loan balance, but the lender agrees to take a lesser amount. A successful short sale includes the lender forgiving any remaining loan balance, clearing you from any future contractual obligations to the lender. California Short Sale Solutions provides short sale counseling and services to any homeowner in the state of California at no cost. You may also be eligible to receive monetary assistance through local government and lender programs.

Short Sale Mortgage Debt Forgiveness Example

Short Sale Example

Total Loan Balance: $400,000
Your Home is Worth: $220,000
You are Upside Down: $180,000
You can apply for financial assistance. Call 1‑800‑760‑9156

California Short Sale Solutions negotiates with your lender and successfully short sells your home for $220,000. Your unpaid balance of $180,000 is forgiven, so your loan balance becomes $0.

Lenders are not allowed to come after you for the debt and/or liens included as part of the short sale negotiations.

Qualify for a Short Sale

A short sale is allowed to be performed on all types of properties; from condominiums or retirement communities to farms and single family residences. You are also allowed to short sale vacation homes and rental homes. The main qualification for a short sale is that you owe more on your loan than what your property is worth. You are allowed to short sale vacation homes, rental homes Secondly, you must be suffering some sort of financial, physical or mental hardship. Many lenders have dropped the required hardship explanation, however. A qualified hardship can include many things, such as:

  • Loss of employment or reduced hours
  • Illness or medical expenses
  • Divorce
  • Higher living expenses or increased bills
  • Investment Loss
  • Changing loan terms or loan payment increase
  • Concerning loan terms/High interest rate
  • Inability to save for retirement
  • Increased anxiety
  • Loss of home equity and inability to refinance

Your Short Sale
Hardship Letter

Our free short sale services include helping you prepare and send a hardship letter as part of the short sale application. You can download an example of a hardship letter here.

The Short Sale Process

To obtain a short sale in California, you must use a licensed real estate agent or brokerage. This must be someone who has experience and knowledge in short sale negotiations. The good news is that we have a team of agents and negotiators at California Short Sale Solutions who are licensed and will do this for you at no-cost. How is this possible? The lender pays the listing commissions when your property is sold, which includes all Title and Escrow fees. You are allowed to stay in your home while the short sale process is occurring.

Step 1: Determine if a Short Sale is Right For You.

Give us a call at 1‑800‑760‑9156 and we can determine if a short sale is your best option. Your other options may include refinance, modification or deed-in-lieu.

Step 2: Obtain Required Documentation

Most lenders require specific documentation, and they don't all require the same thing or use the same forms. Normally the first required document is a hardship letter, which is sent to the lender and explains why a borrower can no longer afford their monthly mortgage payments. The documents are gathered and prepared to be sent to the lender. This step usually takes between 7 and 14 days.

Step 3: Market the Property

We market the home to potential buyers through various channels, including California's Multiple Listings Services (MLS). You are allowed to live in the home during the short sale process. This step usually takes between 20 and 60 days.

Step 4: Negotiation of the Short Sale

Once there is an offer on your property, we submit the offer and paperwork to the lender and negotiate the deal. Negotiations can be tedious and take time. It is best practice to continue marketing the home to get backup offers. If the first offer was not high enough, the lender will counter and tell us they need a higher offer. An ideal offer is one that is close to the appraised value of the house less the consideration of any repair work or time involved for the transaction. During this time we also request monetary funds for relocation assistance from available government and lender programs. This step usually takes between 10 and 30 days.

Step 5: Finish the Transaction

We receive approval from the lender to proceed with the short sale. The next and final step is to begin escrow and close the transaction. Traditional escrow time is 30 days. The total time to process a short sale is normally between 3 and 6 months.

How Long Does a Short Sale Take?

The entire short sale process takes an average of 3 to 6 months depending on the number of loans and property location. Some cases, however, can see the process completed in as little as two months. Varying from lender to lender, it can take two weeks or as long as 60 days to receive an approval of a short sale from a lender. Some lenders have their own dedicated offices working on short sale packages while other lenders outsource. Even with an approval, it may take 2-4 months for the home to be sold. During the short sale process, you are allowed to live in the home and California law protects your home from foreclosure. Give us a call at 1‑800‑760‑9156 and we can let you know how long on average your specific lender will take to complete a short sale.


You Have a Choice

You can have a say in how long the short sale process takes. You might find benefits of having a short sale done quickly, or you may want to take things slow and steady. Call 1‑800‑760‑9156 for help.

Avoid Short Sale Mistakes

Your Short Sale Package is Incomplete

Every lender is different, each with their own paperwork and and short sale submission rules. California Short Sale Solutions understands the short sale process and can explain it clearly. By working closely with hundreds of lenders, we know the rules, laws and paperwork needed to get your short sale completed.

There is not enough time

It is important to understand where you are at in the short sale or foreclosure timeline. On average, a minimum of two weeks before foreclosure is needed to develop a short sale strategy and avoid foreclosure.


Part of the short sale process involves understanding the rules and regulations for short sales, which include tax events, mortgage debt forgiveness, California recourse laws and lender procedures. Without experienced guidance your short sale may fail or include unbeneficial terms.

Accepting the Wrong Buyer

In a short sale, choosing the right buyer will lead to a more successful outcome. California Short Sale Solutions has the experience needed to filter out poorly qualified and non-serious buyers. A buyer may have to wait months for the transaction to close and you don't want a buyer backing out at the last minute.