We are in the process of helping a client buy their first home and they posed the following question about short sales that I thought would be useful to share along with our answer:

-If we go down the path of negotiating a short sale with the bank, am I obligated to purchase? Just wondering in case I see another property I'm interested in during the 3-4 month negotiation period.


Technically yes, but realistically no. The short sale contract states that you will give the seller adequate time to obtain bank approval (typically 60 days), and if you withdraw before that time the seller could try to retain your earnest money. The reality, however, is that you do not actually deposit your earnest money until there is bank approval. If you haven't deposited your earnest money it would be a bit of a hassle for the seller to try and get it from you at that point, but they could have a valid argument as to why they should get it.

Short sales are pretty ambiguous, and you really should not plan on withdrawing your offer prior to bank approval once your offer is submitted. If the bank counters at a higher price, you are not obligated to purchase at that point.

Short sales can be a good value because they usually need to be a really compelling price in order for it to be worth all the waiting (usually 60-90 days at a minimum) and uncertainty (the price you see was set by the listing agent, not the bank, so the bank could counter much higher. The home could also go to foreclosure prior to a short sale being approved). With that said, it can still be pretty disappointing if you really like the place, have your heart set on getting it, and then the deal does not work out in the end for some reason. So be sure you feel comfortable with the terms before jumping into a short sale.


Do you have any questions about buying or selling real estate? If so, feel free to shoot us an email at info@HappyHomeTeam.com or call us 425-413-6428