After doing a short sale, when can you buy again??

First of all let me start by saying I AM NOT AN ATTORNEY OR TAX PROFESSIONAL, and do not mistake this article as legal and/or tax advice!


Ok, disclaimer done.

I sell a LOT of short sales. Approximately 70% of my business in the past 2 years was either short sales or foreclosure. Over these past few years, I have learned a lot about the ins and outs of short sales.

One question I get a lot is: “how will completing a short sale affect my credit?” I can answer confidently that a short sale is MUCH better on your credit than a deed in lieu of foreclosure (4-7 years before a borrower can be considered for another loan) or an actual foreclosure (at least 5-7 years, sometimes up to 10 years before a borrower can qualify for another loan). Now put those two options up against a short sale: borrowers who complete a short sale can be considered for any type of loan as soon as 2 years after a short sale!

Fannie Mae wants short sellers to buy again in the future. Short sales are encouraged by the government. Obama’s Making Home Affordable plan incentivizes lenders, servicers, and borrowers to complete a short sale rather than go deed in lieu or actual foreclosure. However, unfortunately, short sales have NOT been streamlined yet. Every bank seems to treat them differently. For instance, with Bank of America, I had a short sale under contract for over 12 months. It did eventually close somehow, but imagine the frusteration.

One thing I can say is: our industry is extremely dynamic, and constantly changing. This is even more true with the short sale industry. I feel like a lot of the banks are getting their acts together. I even had a short sale that was less than a month from contract to close!

What I hope to see is more “pre-negotiated” short sales. In other words, a lender knows that the borrower will not be able to continue making payments and will want to do a short sale. Well, that lender can get the valuation of the property and give the homeowner or their realtor a “strike-off” price to short sell the property at. This would really alleviate the main objection most buyers avoid short sales for: that is the sheer amount of time it takes to get these deals approved and accepted by the lender. I have been starting to see this happen more, and I am guessing that is a trend that will continue.



Ben Blonder, Broker/Owner Kapital Real Estate LLC