Windermere Professional Partners

Buying a Short Sale Part 1: Preparing to Purchase

testing January 25, 2012
Last updated July 2, 2019

If you have been tuning into what’s happening in the housing market with an eye towards making a purchase, chances are you’ve been hearing the phrase “Short Sale” a fair amount. But what is a short sale?

A short sale happens when the amount owed on the mortgage is higher than the price the house could sell for on the open market. For example, the Jones Family bought a house for $200,000 in 2005. That house is now only worth $150,000, but they still owe$180,000 and are moving away for work. This would be a Short Sale. Once the Jones’ find a buyer, they will have to submit the contract to the bank that holds the mortgage for approval before the deal can close.

Short sales can be an excellent deal for buyers. They are often in better condition than bank owned homes and since some buyers avoid them you can often find excellent buys. The process of purchasing a short sale can be more complex than the average home purchase, and the most important thing is to prepare and educate yourself about the process in advance.

According to Linnie Smith (a Short Sale Listing Specialist with The Sapphire Group), one of the most important things short sale buyers need is patience. “Even though major progress has been made in the processes used by mortgage lenders to sell short sales, they still take months to make their way through to approval,” says Linnie. “If there is more than one mortgage (or any other type of lien, like a Home Owner’s Association) you must wait for an approval from each lien holder SEPERATELY.”

Typically a short sale takes about 3-4 months to be approved by the bank. According to Linnie, you should add an additional 2-4 weeks for each additional lien holder.

Short Sale Listing Specialist Linnie Smith is sharing her tips for successfully purchasing Short Sale properties in this series “Buying a Short Sale.” Stay tune for our next post, “Educating Yourself and Making an Offer.”