How long does a short sale take in Florida?

A short sale in Florida typically takes 60 to 120 days from the time the offer is submitted to the lender for approval. The timeline depends on the lender's responsiveness, the number of lien holders, the complexity of the seller's financial situation, and whether the lender requires a BPO (Broker Price Opinion) or appraisal. Some short sales with multiple lien holders can take 6 months or longer.

What is a deficiency judgment in a Florida short sale?

A deficiency judgment is when the lender pursues the seller for the difference between the mortgage balance and the short sale price. Under Florida law (F.S. 702.06), lenders may seek a deficiency judgment within one year after the short sale closes. However, many short sale approval letters include a deficiency waiver. It is critical that the seller's attorney review the approval letter to confirm whether the deficiency is waived.

What title issues are common in short sales?

Common title issues in short sales include multiple mortgage liens that all require approval and payoff negotiation, judgment liens and tax liens that must be resolved, HOA or condo assessment liens with delinquent balances, and IRS liens if the seller has federal tax debt. The title company must coordinate payoff of all liens from the limited sale proceeds, which requires lender approval for each payoff amount.

What is the REALTORS role in a short sale?

REALTORS represent the seller or buyer and facilitate communication between the parties and the lender's loss mitigation department. Key responsibilities include pricing the property accurately based on market comparables, preparing the short sale package (hardship letter, financial statements, tax returns), submitting the package and offer to the lender, following up regularly on lender review status, keeping the buyer engaged during the extended timeline, and coordinating with the title company once approval is received.

Short Sale Closing Process for REALTORS® in Florida

What REALTORS® Need to Know About Short Sales

A short sale occurs when a property is sold for less than the outstanding mortgage balance, with the lender's approval to accept the reduced payoff. While less common than during the 2008-2012 foreclosure crisis, short sales still arise when homeowners face financial hardship, property values decline, or adjustable-rate mortgages reset beyond affordability. REALTORS® who understand the short sale process can guide their clients through a complex and emotionally difficult transaction.

Step 1: Pre-Listing Preparation

Before listing a short sale, the seller needs to assemble a complete short sale package:

Hardship letter: A written explanation of why the seller cannot continue making mortgage payments
Financial statements: Income, expenses, assets, and liabilities
Tax returns: Most recent 2 years of federal returns
Bank statements: Most recent 2-3 months
Pay stubs: Most recent 30 days (or proof of unemployment)
Mortgage statements: Current statements for all liens on the property

REALTORS® tip: Recommend the seller consult an attorney before listing. Deficiency judgment exposure, tax consequences, and credit impact all require legal analysis.

Step 2: Pricing and Listing

Price the property based on current market comparables, not the mortgage balance. The lender will order their own BPO (Broker Price Opinion) or appraisal to verify market value. An overpriced short sale listing will sit without offers, wasting time during a process where urgency matters.

Step 3: Receiving and Submitting an Offer

When an offer is received, submit it to the lender's loss mitigation department along with the seller's short sale package. Include:

The purchase contract
A preliminary settlement statement showing the proposed distribution of proceeds
The listing agreement
Comparable sales supporting the offer price

Step 4: Lender Review (60-120+ Days)

This is the longest and most uncertain phase. The lender reviews the package, orders a BPO, and determines whether to approve the short sale. During this period:

Follow up weekly: Call the loss mitigation department regularly. Document every conversation.
Keep the buyer engaged: Communicate status updates. Buyers who feel ignored will walk away.
Watch for counter-offers: The lender may counter with a higher minimum net price.
Multiple lien holders: If there is a second mortgage, HELOC, or other liens, each lender must independently approve the short sale.

Step 5: Approval Letter Review

When the lender issues a short sale approval letter, review it carefully. Key items:

Approved sale price: Must match the contract price
Closing deadline: The lender typically gives 30-45 days to close
Deficiency waiver: Does the letter explicitly waive the lender's right to pursue a deficiency judgment? This is critical.
Contribution requirements: Some lenders require the seller to contribute cash at closing

Critical: Under Florida law (F.S. 702.06), lenders may pursue deficiency judgments within one year after a short sale. If the approval letter does NOT include a deficiency waiver, the seller should consult an attorney before closing.

Step 6: Title and Closing

Once the lender approves, the title company orders a title search and begins closing preparation. Common title issues in short sales:

Multiple mortgage liens: Each requires separate payoff negotiation
Judgment liens: Must be resolved from limited proceeds
HOA/Condo liens: Delinquent assessments must be addressed
IRS liens: Federal tax liens require IRS approval for subordination or discharge

Tax Consequences

The forgiven debt may be treated as taxable income by the IRS. The lender issues a 1099-C for the canceled debt. Exceptions may apply under the Mortgage Forgiveness Debt Relief Act (for primary residences) or the insolvency exception. The seller should consult a tax professional.

Frequently Asked Questions

How long does a short sale take?

60-120 days from offer submission to lender approval. Some with multiple lien holders take 6+ months.

What is a deficiency judgment?

When the lender pursues the seller for the difference between the mortgage balance and the sale price. Florida allows pursuit within one year. Deficiency waivers in the approval letter are critical.

What title issues are common?

Multiple mortgage liens, judgment liens, HOA assessment liens, and IRS liens requiring coordination from limited proceeds.

What is the REALTORS® role?

Pricing, assembling the short sale package, submitting to the lender, weekly follow-up, keeping the buyer engaged, and coordinating with the title company.

Navigating a short sale closing? Contact Barnes Walker for experienced title support.

Disclaimer: Short sales involve legal, tax, and credit consequences. This guide is for educational purposes. Sellers should consult an attorney and tax professional before proceeding.