How Does a Short Sale Work in New York?
In a short sale, you list the home, find a buyer, and send the buyer's offer to your lender for approval. The lender reviews your finances and the offer, then approves, counters, or declines — and only after approval can the sale close.
The seven steps
Your servicer may combine or reorder some of these, but the overall path is the same.
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Ask your lender what it requires
Call the loss mitigation department and ask for its short sale package. Requirements differ by servicer and by loan type.
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Put your paperwork together
Expect a hardship letter, a financial statement, proof of income, bank statements, and a signed authorization letting your agent speak with the lender.
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List the home and market it
The home is priced with the lender's likely approval in mind and shown like any other listing. Offers are collected and reviewed with you.
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Accept a buyer's offer
You sign a purchase contract that makes clear the sale depends on the lender's approval. The buyer typically deposits earnest money.
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Submit the package to the lender
The contract, your financial documents, and the listing details go to the servicer. Ask for the submission date and a point of contact.
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Follow the lender's review
The lender may order a broker price opinion or appraisal, ask for more documents, or counter the price. Respond promptly and keep copies of everything.
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Close after written approval
Once the lender approves in writing, the sale proceeds to closing. Read the approval letter closely — it can set conditions on the payoff and on any remaining balance.
Questions about the process
What documents does a lender want for a short sale?
Most lenders ask for a hardship letter, a financial statement, proof of income, recent bank statements, and the purchase contract. Each servicer publishes its own list, so ask yours for the current requirements.
Can I sell to a family member or friend in a short sale?
Many lenders restrict sales to people connected to the seller, such as relatives or business partners. Ask your servicer about its rules before accepting an offer from someone you know.
What happens if the lender rejects the short sale offer?
The sale does not go forward at that price. You can ask the lender why, request a counteroffer, submit a revised offer, or discuss other options with your attorney and the lender.
Do I pay the real estate commissions in a short sale?
Commissions are usually paid from the sale proceeds and are part of what the lender approves. The exact arrangement is negotiated in the approval, so confirm it in writing.
This page is general information, not legal, tax, or financial advice. Your lender's approval letter and your attorney's review control what actually happens in your sale.
Keep reading
What is a short sale?
The plain-language definition and the questions homeowners ask first. Start here.
Short sale vs. foreclosure
What changes when a foreclosure is already underway. Compare the paths.
How long does it take?
Which stages move quickly and which ones wait on the lender. See the timeline.
Where are you in the process?
Just starting, or already have a buyer? Tell me where things stand and I will tell you what usually comes next.