HOW TO BUY A SHORT SALE PROPERTY
A short sale is when a property is sold for less than what is owed on the balance of the mortgage(s), with the lender approving the short payoff on the mortgage. Short sales are not quick by any means so don't be fooled by that name. The short sale approval requires a process which usually takes a few weeks to months to complete.
As the buyer in a short sale situation, there are a few things you can do to determine how likely your offer is to be approved, and to ensure that things go as smoothly as possible.
Qualify the real estate agents!
The Seller's Agent: The single most important person in the short sale is the listing agent for the seller. Unless a third party company is being utilized for the short sale (usually not a great sign), the listing agent will be doing all the heavy lifting on the short sale and communicating with the lender.
If possible, research their history in selling short sales or have your agent ask some basic questions about their expertise in this area. An inexperienced agent can easily fumble up an otherwise approvable short sale.
The Buyer's Agent: While the buyer's agent has limited direct control of the short sale process, a buyer's agent experienced with short sales will know how to qualify the seller's agent, and understand the steps and timeline of the short sale to be able to guide you through the process and anticipate possible obstacles.
Points to keep in mind:
While you may get a little bit of a better deal on a short sale home vs. a traditionally sold home, there are a few things to keep in mind:
- The short selling lender will be ordering an appraisal of the property as part of the approval process, and this value will determine what they accept. Lenders are not in the business of taking large losses so your offer will have to be halfway reasonable to be approved.
- The short sale approval process generally takes 2-3 months if all goes well. That means you are probably looking at a 3-4 month timeline from contract to close, if approved. Timelines can be unpredictable, so if you have a strict time requirement, short sales are not for you.
- While there is some waiting required, you should still have most of your mortgage legwork and inspections done before the approval so that once the approval letter is generated, all that is left to do is for all the parties to close.
- 99.99% of all short selling lenders require that a property was listed on the MLS with a Realtor before they will approve. This means DYI efforts to sell or buy a short sale are useless. Commissions and attorney fees are usually always allowed closing costs, so professional assistance won't even cost the parties anything. There is simply no reason not to have professional help, so get the best help you can!
PROS AND CONS OF BUYING A SHORT SALE!
Pros
- You may receive a discounted price on a home.
- Seller's are unlikely to care about the sales price as long as the lender approves the sale.
- You are preventing a foreclosure.
- Standard closing costs are generally payable so you won't have to worry about coming out of pocket for Realtor fees, and you will know in advance what seller concessions will be allowed.
Cons
Should you buy a short sale?
If you are willing to be patient and flexible, short sales may offer you a chance to get a home for a discounted price, or more home than you could normally afford. The key to success is being prepared and choosing the right help!
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I know full well that I wouldn’t have gotten my house without Minna! As a first-time home buyer in a new city and someone looking for a multi-family property, it was easy for me to be ignorant of the buying process. However, Minna listened to me on what I was looking for in a home. She helped strategize on making a quality offer that won the bid. She helped me find a quality lender. She was quickly responsive through call, email, or text. And, she also helped me find quality contractors to start knocking out projects I wanted done immediately. Working with her made the buying process a breeze, especially for a newbie like myself. Minna is absolutely someone I would recommend to anyone looking to buy a home, and I personally intend to reach back out to her for my next property.
patrick murphy
Last Updated on December 30, 2025 by Minna Reid
