Denver Realtor® Short Sale Expert - Anthony Rael, REMAX Alliance

What is a Short Sale?
Simply put, a short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan. Unfortunately, the following terms are starting to become common in everyday conversations:

"I'm upside down"
"my home is underwater"
"I purchased during the covid years (2020-2023) and now my property is worth less than I paid"

In these cases, your home is not worth what you currently owe to the bank for your mortgage loan. There are many reasons why this happened, but the most common is due to the fact that market conditions deteriorated due to the accelerated pace that prices soared to during the covid years (2020-2024) as mortgage interest rate rates were at historic lows which allowed buyers to qualify for more. Unfortunately the "perfect storm" of low inventory & low rates put us in the challenging position we're in today (2026)!

The Short Sale Process and YOU
If you happen to be "upside down" or "underwater" on your mortgage, your bank *may* grant a short sale for two reasons: the seller has a hardship and the seller owes more on the mortgage than the home is worth. The most common hardship examples include:

Unemployment / reduced income
Divorce
Medical emergencies
Job transfer that requires you to move out of town
Bankruptcy
Death (you or a spouse)

As a seller, you will need to prepare a short-sale package for submission to your bank/lender. Each bank/lender has its own guidelines, but the basic procedures are pretty similar from bank to bank. A short-sale package will most likely consist of:

Letter of Authorization (which allows me to speak to the bank on your behalf)
Completed Financial Statement
Seller's Hardship Letter - (this is critical to getting a short-sale approved by your lender)
2 Years of Tax Returns
2 Years of W-2s
Recent Payroll Stubs
Last 2 Months of Bank Statements
HUD-1 or Preliminary Net Sheet
Comparative Market Analysis (CMA) with a list of recent comparable sales in your neighborhood

At this point, the process is not unlike a traditional sale - I will work with you to establish a listing price based upon current market conditions and we'll inform other agents (via the MLS) that this is a short sale - pending bank approval. We'll work hard to solicit offers, submit them to the bank and and wait for their loss mitigation department to respond. It can be several weeks to several months depending how backlogged they are. I can't stress enough that patience is essential for you and the buyer.

Potential Tax Consequences
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a short sale or foreclosure, may be subject to taxes. I am not an attorney or CPA so can not give legal or tax advice, so be aware that there may be potential tax consequences, so it’s always best to seek professional guidance in these areas as needed.

The Short Sale Process with the BANK
In most cases, buyers should expect to wait anywhere from 30-days to several months to get a response from the bank. Our transaction management team will communicate WEEKLY with your bank and keep all parties updated throughout the process. Some buyers get tired of waiting for short sale approval and may threaten to cancel if they don't get an answer within a specified time period. Unfortunately, there's nothing you can do. If you're easily frustrated or very inpatient, pursuing a short sale is probably not a good idea for you because we simply have no control over the bank approval./acceptance timeline.

Don't be overwhelmed or confused. Selling your home or condo via short sale is a better
alternative to foreclosure. Call Anthony Rael for a non-obligation consultation today!

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