Short Sale for Real Estate Agents: Documents Needed to Get Approved

If you’re a real estate agent working with distressed homeowners, you already know short sales can feel overwhelming. One of the biggest hurdles is making sure you have the right documents before submitting the package to the lender. Missing even one piece of paperwork can delay approval—or worse, cause the deal to fall apart.

This post breaks down the essential short sale documents every agent should gather, plus a few pro tips to keep your file moving smoothly.  

I've created a brand new book for Real Estate Agents and Investors navigating the short sale process to make it smooth and easy. It comes with downloadable checklists, sample HOA emails letters, IRS negotiations, Solar Panels etc. It has it all.

Why Documentation is Critical in a Short Sale

Lenders are not just approving a real estate transaction—they’re agreeing to take a loss. That means they want full assurance that the homeowner qualifies for hardship, the buyer is legitimate, and the numbers add up. The cleaner and more complete your document package, the faster you’ll get a decision.

Core Short Sale Documents Every Agent Should Collect

1. Hardship Letter

• Written by the homeowner. Signed and dated

• Explains why they cannot continue making payments.

• Should be clear, honest, and specific (job loss, medical bills, divorce, etc.).

2. Financial Package

This usually includes:

• Last two years of tax returns.

• Recent pay stubs (or proof of income if self-employed).  Last 60 days

• Bank statements (usually last 3 months).

• Monthly budget showing income vs. expenses.

3. Authorization to Release Information

• Signed by the homeowner.

• Allows you (the agent) and any negotiator to speak with the lender directly.

4. Listing Agreement

• Proof that the property is actively on the market.

• Some lenders require MLS printouts. (aka: MLS Sheet)

5. Purchase & Sale Contract

• Executed contract between buyer and seller.

• Must usually include contingencies that align with short sale approval timelines.

6. Preliminary HUD-1 / Settlement Statement

• Shows the lender how much they will net after all expenses.

• Needs to match lender requirements (this is where many deals get delayed if prepared incorrectly).

7. Short Sale Addendum

• Often required by HUD and certain servicers.

• Confirms that the transaction is arm’s length (no hidden agreements between buyer and seller).

8. Proof of Funds or Pre-Approval Letter from Buyer

• Demonstrates that the buyer can actually close.

• Cash buyers need proof of funds; financed buyers need a pre-approval letter.

Pro Tips for Agents Handling Short Sale Documents

• Triple-check for signatures: Many delays happen because a form is missing a signature or date.

• Submit a clean, organized package: Lenders like when everything is in one PDF with a table of contents.

• Know each lender’s requirements: Some require additional forms (like IRS Form 4506-T).

• Keep homeowner communication consistent: Missing bank statements or incomplete financials are common snags.

Final Thoughts: Be the Agent Who Gets Short Sales Closed

Short sales are a lifeline for homeowners in distress—and an incredible niche for agents who know how to handle them. The difference between closing and losing a deal often comes down to whether you submitted a complete and accurate document package.

If you want done-for-you checklists, scripts, and templates for every step of the short sale process, grab a copy of my book:

👉 The Ultimate Short Sale Workbook for Real Estate Agents & Investors

Stephanie Parks

[email protected]

Attractionshortsale.com