In a short sale transaction, what document may be required from the seller?

In a short sale transaction, a letter explaining the seller's changed financial circumstances is often required. This letter, commonly referred to as a "hardship letter," provides the lender with insight into why the seller is unable to continue making mortgage payments and why a short sale is necessary. It typically details the financial hardships that have led to the need for a short sale, such as job loss, medical emergencies, or other unexpected expenses that have adversely affected their financial position.

This document is crucial for the lender's decision-making process because it helps them assess the seller's situation and the legitimacy of the request for a short sale. By providing a clear and compelling narrative of their financial difficulties, sellers can strengthen their case for the lender to approve the short sale and potentially accept a lower payoff amount on the mortgage.

In contrast, while an appraisal, a report from a real estate agent, and a listing agreement can be part of the short sale process, they are not typically required in the same way as the hardship letter. The appraisal provides a value assessment of the property, the report from a real estate agent may include market insights or advice on pricing, and the listing agreement formalizes the relationship between the seller and their agent. However, these documents alone do not