The short sale process begins with the property owner requesting the sale and in the best-case scenario, ends in a few weeks with closing of the sale. Short sales are approved for a financial hardship or a lack of equity in the property to cover the mortgage, according to About.com.
Short sales often progress slowly, taking an average of 90 to 120 days, reports About.com. Once the bank receives the required paperwork, it begins the process of reviewing the short sale. It acknowledges the receipt of the file and assigns a negotiator to the short sale. The bank also orders an appraisal of the property and a comparison of sales of similar properties. Some banks assign a second negotiator before sending the offer to the investor.
The bank often asks all parties of the sale to sign an arms-length affidavit, indicates About.com. This document is for preventing mortgage fraud and usually prevents a short sale to a relative of the current homeowner. The affidavit ensures that the homeowner does not profit from the sale of the home. Once the bank approves the short sale, it issues a letter of approval, and the sale proceeds to closing if the buyer is still interested.
If the short sale does not cover the entire amount of the loan, there is a deficiency. In some cases, the seller is responsible to pay any deficiency after the sale of the home, as Bank of America explains.