Short Sales

Have you ever been told to steer clear of short sales or been told that they are a great deal? How do you know what to believe?

Buying a short sale can be a complicated and time-consuming process, rarely completed in less than 30 days and often much longer. Are short sales worth the extra effort? Before believing that a price is too good to be true, it is essential to understand how the short sale process works and have a real estate attorney and agent on your side.

A short sale is the sale of a property that the lender is willing to accept less than the amount owed on the mortgage in full payment. To be considered a short sale, the total of the costs of selling the property and the payment of all liens on the property must be less than the proceeds from the sale.

The short sale process allows both the lender and the homeowner to avoid foreclosure. Lenders do not enter into short sales lightly. Lenders will try their best to recover as much of their loss as they can. It is important to understand that even if a property is listed as a short sale, this does not mean the lender will accept the offer, even if the seller accepts it. 

Short Sales

The proceeds of the sale must be less than what the homeowner owes on the property, including mortgage liens, tax liens, construction liens, judgment liens or any other lien on the property plus the seller’s closing costs. Potential buyers will still work with the seller, but the lender must approve the sale, or the short sale will not happen. The short sale process can be frustrating, lengthy, and unpredictable because a lender can deny a short sale, and it is irrelevant that the buyer and seller agree on the terms.


When a mortgage foreclosure takes place, the lender initiates a lawsuit the object of which is to sell your property at auction and use the proceeds towards reducing the mortgage debt. The winning bidder at the auction sale will evict any homeowner still living in the home once the new owner’s title to the property is official.  Any unpaid mortgage loan balance after the foreclosure is still the responsibility of the homeowner. Many people in that position file for bankruptcy protection to get rid of that leftover mortgage debt.

Homeowners typically prefer short sales because they are voluntarily giving up their home instead of being forced out by the bank, and the unpaid mortgage loan balance is usually forgiven. That alone is a major reason to pursue a short sale.  

The Short Sale Process

  1. The homeowner works with a real estate agent to list the property, and once a buyer is found, a sales contract is signed. This contract is subject to the lender’s approval even if the buyer and seller agree to its terms.
  2. Once the contract has been signed, the homeowner initiates the short sale process by submitting a short sale package to their lender. The homeowner must explain why they are no longer capable of making mortgage payments. 
  3. The lender reviews the contract and can respond by rejecting, countering, approving, or not responding to the contract. 
  4. If approved by the lender, the buyer can choose to change or reject the lender’s terms. 
  5. If the contract is approved, the short sale property closes, and the home belongs to the new buyer. The lender receives all proceeds from the sale of the property and releases the original homeowner from their mortgage loan—even though the full mortgage balance was not paid off by the proceeds.

Florida National Title Services

Because short sales are so complex, you’ll need a real estate agent and experienced title attorney who can tell you if a short sale is right for your situation, who will walk you through the process, and answer any questions you have along the way. 

Florida National Title Services provides expert title services. When you are renting, we can help with every step of the way. Florida National Title has years of experience guiding Florida homebuyers through the real estate purchase and refinance experience and have helped them solve the problems that come up in the process. We will decipher the “legalese” and explain what we need and why we need it each step of the way. The blogs to follow will address specific issues to guide buyers to understand the process better and to help them avoid many of the pitfalls. Call us at (561) 408-0729 or visit our website.


Florida National Title Services, LLC
250 S. Central Blvd., Suite 101
Jupiter, Florida 33458
(561) 408-0729


© Copyright 2019. All Rights Reserved.