Loss Mit Services

Short Sales Take Forever: The Honest Timeline and Where the Time Really Goes

Posted on 19. Oct, 2026 by ctlms in Blog, Foreclosures, My Blog, News, Real Estate, Short Sale, foreclosure

“Short sales take forever.” I hear that from agents all the time, usually right before they tell me they stopped taking these listings. And I’m not going to argue with them, because mostly they’re right. The myth isn’t that a short sale is slow. The myth is that it’s slow for no reason, and that nobody can do anything about it. So let’s talk about the real timeline, where the time goes, and which parts you can actually control.

How long does a short sale really take?

Start to close, a short sale typically runs four to six months, and sometimes longer. Lender approval by itself commonly takes 60 to 120 days, and that is before the closing window written into the approval letter. You will not get a normal 30-day escrow out of one of these, and you shouldn’t tell your seller you will.

If you were told two to four months, that’s the old number. It’s the one that got a lot of agents burned. They set an expectation with the seller and the buyer, month three came and went with no answer, and the buyer walked. I’d rather you hear the long number from me now than discover it yourself in month three.

Why does it take so long?

Think about who has skin in the game. The mortgage servicer is the company you send your payments to, and it gets paid every month to service that loan. Resolving a delinquent file faster doesn’t put money in the servicer’s pocket. Behind the servicer there is often an investor who owns the loan and has to sign off, and the bank has been burned on sloppy paperwork before, so it checks everything twice. A valuation gets ordered. A negotiator gets assigned. Files get passed from one desk to another.

So the process moves at the speed of the slowest person in the chain, and nobody in the chain is being paid to hurry. That part isn’t fixable. I’d be lying if I said otherwise.

Where does the time get lost?

Here is what we see on files, in the order I see it. Most of it isn’t the bank.

1. The package comes back incomplete. A missing signature, a form that wasn’t filled out all the way, a bank statement with a page missing. The bank doesn’t call and ask nicely. It sends the file back, and you go to the back of the line. Dot your I’s and cross your T’s, because the bank does care about the minor error.
2. The income documents go stale. The seller sends pay stubs and bank statements, the file sits in review for six weeks, and now the documents are too old to use. Everything gets re-sent, and the clock starts over on that piece.
3. A second lien nobody asked about. A second mortgage, a home equity line, an HOA balance, a municipal lien. If you don’t find it until month three, it sinks an otherwise clean file, because now there is another party who has to say yes. Ask for the title information on day one.
4. Nobody owns the follow-up. A file that nobody calls on for two weeks doesn’t sit still, it drifts backward. Somebody has to be on the phone, every week, with the servicer.

Those four are what an agent and a negotiator can actually control. That’s the reason I want to see a file early, before the first price reduction and well before the buyer is losing patience.

Does a short sale ever move quickly?

Sometimes a lender moves faster than expected. I’ve seen it happen. But a short sale is not a short sale, every one is its own file with its own servicer, investor and lien structure, and I wouldn’t build a plan around the fast one. Plan for the long number and be pleasantly surprised if you get the short one.

What do I tell my seller and my buyer?

Tell them the truth up front. Four to six months, sometimes longer, and nobody can promise how long theirs will take. Nobody can promise an approval either, not me, not the bank’s own rep on the phone. A short sale can hurt the seller’s credit, and I won’t pretend otherwise. And lenders commonly ask for a reduction in your commission, so you want that conversation early, not at closing.

Whether a short sale is right for your seller is a decision for the seller. Questions about taxes belong with a CPA, and questions about the legal side belong with a real estate attorney. I’m neither one.

The takeaway

Short sales are slow. That part of the myth is true. But a lot of the delay is fixable, and the most fixable piece is when the file gets started and how complete the package is when it goes in. Raise it early, get the payoff and lien information on day one, and set the long expectation from the beginning.

If you have a listing where the payoff is higher than any realistic price, send me the address and the approximate payoff. I’ll tell you within a day whether it’s worth pursuing.

As always, feel free to reach out to me with any questions.

Sean Wilder
Loss Mit Services
860-265-3727
CT Debt Negotiator NMLS #828273
Loss Mit Services is a dba of Accredited Home Services, LLC · CT Debt Negotiation License DN-828273

The Divorce Listing Where the Payoff Won’t Clear: When to Call a Short Sale Negotiator

Posted on 16. Oct, 2026 by ctlms in Blog, Foreclosures, My Blog, News, Real Estate, Short Sale, foreclosure

“Neither of them can keep the house, and the payoff is higher than anything we’re going to get for it. Now what?” I hear some version of that from agents who take a divorce listing and run the numbers at the kitchen table. It usually comes a few weeks too late, after a price reduction or two, and after the two owners have stopped being on speaking terms. So here’s the trigger I want you to listen for, and what I’d do about it.

What makes a divorce listing different?

Most underwater listings have one decision maker, or two who are still on the same team. A divorce listing has two owners who want out of the same loan and, in many cases, no longer want to deal with each other.

Here’s the WHY it gets stuck. Nobody is keeping the house. Neither person can refinance it, because the payoff is more than the property is worth, and nobody refinances into a loan bigger than the house. Neither wants to keep paying on it either, since that means carrying a debt on a place they don’t live in, or one they can’t afford alone. So the only exit is a sale, and the sale doesn’t clear the payoff.

Who is actually on the hook?

This is the part that surprises people. In most of these files both spouses are on the mortgage and on title. What the two of them have agreed to between themselves, or what a court has said about who pays what, doesn’t change who signed the note. The lender doesn’t care who got the house in the settlement. The lender cares who is on the loan.

How a divorce decree treats the mortgage, and what it means for each spouse, is a legal question. That’s one for the divorce attorney or a real estate attorney, not for me and not for you. If your seller’s attorney is going to have an opinion, you want to hear it before the listing agreement turns into a surprise.

What actually stalls these files?

Three things, in the order I see them.

1. Both owners generally have to sign. Every authorization, every form, every disclosure, from both people, and often ink signed. When the two of them are barely communicating, one person sits on the paperwork for two weeks and the whole file waits. The agent in the middle ends up playing messenger, and that’s rarely what you signed up for.
2. The clock. A short sale commonly runs four to six months from start to close, and lender approval alone commonly takes 60 to 120 days. That is a long time to ask two people in the middle of a divorce to stay cooperative, stay reachable and keep returning documents on time. Some will. Some won’t. It’s much easier when we all know on day one how long the road is.
3. The late conversation. By the time the third price reduction goes up, the listing has been sitting for months, the buyers who would have made an offer have moved on, the sellers are worn out, and the file starts with a much shorter runway. Most of the damage in these files is time that was already gone before anyone raised a short sale.

What should you do at the listing appointment?

Get the payoff statement first. Not an estimate, the actual payoff, including every lien on the property. Then compare it honestly to where the market is. If it clears with room to spare, you have a regular listing. If it doesn’t, and neither side can bring money to the table or refinance, that’s the moment to ask whether a short sale is worth looking at. Notice I said “looking at.” Whether it’s the right path for those two people is their decision, and it’s something to take up with their own attorneys and a CPA about the tax side. I’m not either of those, and I don’t pretend to be.

And if it is on the table, I’ll be straight with you about what comes with it. A short sale can hurt the sellers’ credit. The lender decides whether to approve it, based on its own guidelines, not on how sympathetic the situation is. Lenders commonly ask for a reduction in commission, and I’d rather you hear that now than at closing. Nobody can promise an approval, including me.

The takeaway

Divorce, a payoff above any realistic list price, and neither owner able to refinance or carry the loan. That combination should make you pick up the phone before the first price reduction. Get the payoff, raise the possibility early, route the legal and tax questions to the right professionals, and let us help you with the part we do every day.

Send me the address and the approximate payoff. I’ll tell you within a day whether it’s worth pursuing.

As always, feel free to reach out to me with any questions.

Sean Wilder
Loss Mit Services
860-265-3727
CT Debt Negotiator NMLS #828273
Loss Mit Services is a dba of Accredited Home Services, LLC · CT Debt Negotiation License DN-828273

Commission on a Short Sale — What Lenders Allow, and How the Reduction Actually Gets Negotiated

Posted on 21. Sep, 2026 by ctlms in Blog, Foreclosures, My Blog, News, Real Estate, Short Sale, foreclosure

“Am I actually going to get paid on this?” I get that question from agents all the time, usually about two minutes into the first phone call about a short sale listing, and I’d much rather you ask me on day one than find out the answer on the settlement statement in month five. So this post is the honest version, the one you’d get if you called me.

Do lenders cut commissions on short sales?

Yes. Not always, and not nearly as often as the 2009-era horror stories would have you believe, but it happens, and anyone who tells you it never happens is selling you something. What I want to do here is explain WHY it happens, because once you understand the why, you know exactly when to worry and when not to.

Start with who’s paying you. On a normal sale the seller pays the commission out of their equity. On a short sale there is no equity. Every dollar on that settlement statement, your commission included, comes out of the net that goes back to the investor who owns the loan, and that investor is already taking a loss. The banks don’t do short sales to help people, they do short sales to help themselves, and “help themselves” means recovering more than they’d expect to recover by foreclosing. So they have rules for what they’ll allow to come off the top, and the rules depend on who owns the loan. Who owns the loan is the first thing you need to know on any short sale, and this is one more reason why.

What do the big investors actually allow?

Here’s where the real numbers live, and they’re better than most agents expect.

1. Fannie Mae. The Fannie Mae Servicing Guide (section D2-3.3-01, if you want to look it up) lists the transaction costs a servicer can deduct from the sale price on a Fannie Mae short sale. Real estate commission is on the list, described as “customary for the market,” capped at 6% of the sales price.

2. Freddie Mac. Freddie put out a bulletin back in August of 2009 telling its servicers they could no longer condition approval of a short sale on cutting the listing broker’s commission, as long as that commission was 6% or under. Above 6%, the servicer is required to renegotiate it down to 6%. That rule has been the practice on Freddie files ever since.

3. FHA. HUD’s pre-foreclosure sale program, which is what an FHA short sale is called, allows a real estate commission of up to 6% as well.

So on the three biggest buckets of loans in Connecticut, a market-rate commission is an allowable cost and, in my experience, it usually survives the approval intact. That’s the good news, and it’s the part the 2009 stories leave out.

Where do the cuts really happen?

Three places, and after more than 2,000 of these I can tell you they’re pretty predictable.

1. Portfolio lenders and private investors. A local bank or credit union that kept the loan on its own books, or a private investor who bought the note at a discount, doesn’t have to follow anybody’s guide. Their “guideline” is whatever the person reviewing the file thinks is reasonable that day. Some are perfectly fair. Some see the commission as the easiest number on the page to trim. You don’t know until you ask, and I ask early.

2. Second mortgages and other junior liens. This is the big one. The second mortgage holder is often being asked to release a five- or six-figure lien for a few thousand dollars, and they know it. They can’t do much about the first mortgage’s payoff. They can’t do much about the taxes. So when they go looking for a place to squeeze, they look at the commission. It’s not personal. It’s just the only line on the statement they think they can move.

3. Any file where the net comes back a little short. This is the one that catches agents off guard. The valuation comes in, the investor runs the numbers, and the offer nets them a few thousand dollars less than their minimum. Somebody has to give. The buyer might come up a little. The seller, by definition, has no money to bring. So the negotiator on the lender’s side looks down the settlement statement and lands on the commission. This is the moment I’m talking about when I say I’ll tell you it’s coming before it comes. A good negotiator sees the net gap when the valuation lands, not when the approval letter shows up.

What changed with the buyer-agent side?

Since the NAR settlement took effect in August of 2024, buyer-broker compensation isn’t offered through the MLS the way it used to be. A lot of agents ask me how that plays on a short sale. The honest answer is that from the lender’s chair, nothing changed. The lender approves what’s on the settlement statement. If the seller is paying a buyer-broker fee, it shows up as a seller-paid cost, and the lender is looking at the total that comes off the top, however it’s split between the two sides. Write it up cleanly, put it where it belongs, and the total is what gets measured against the ceiling.

So here is the question to ask any short sale negotiator, licensed or not, before you refer a client: how exactly do you get paid, and where on the settlement statement does it land? A straight answer to that question is worth more than any promise about approval rates.

One settlement statement

I’ll say this every time commission comes up, because it’s the whole reason a commission can turn into a surprise. Every lienholder on the file gets the same settlement statement with the same numbers. The first mortgage, the second, the HOA, the tax collector, the town. If the first sees one commission figure and the second sees another, you don’t have a short sale, you have a problem that will surface at the worst possible moment. Same numbers to everybody, one statement, is how we run every file, and it’s how your commission stays what it was approved to be.

The takeaway

Lenders do cut commissions on short sales, but not randomly. On Fannie Mae, Freddie Mac and FHA loans, a commission up to 6% is an allowable cost and usually survives. The cuts come from portfolio lenders, junior liens, and files where the net comes up short, and all three of those are visible early to someone who’s looking. Know who owns the loan. Ask your negotiator how they get paid. Insist on one settlement statement. Do those three things and commission stops being the thing you find out about last.

Send me the address, the approximate payoff, and who services the loan. I’ll tell you within a day whether it’s worth pursuing, and what the commission picture usually looks like on that kind of loan.

As always, feel free to reach out to me with any questions.

Sean Wilder
Loss Mit Services
860-265-3727
CT Debt Negotiator NMLS #828273
Loss Mit Services is a dba of Accredited Home Services, LLC · CT Debt Negotiation License DN-828273