Despite their unpredictable nature, short sales are becoming an increasingly common part of the real estate landscape, and represent an attractive option for many Redfin customers. In order to give our customers the best possible service, Redfin Agents can help you tour and purchase short sale properties. Instead of a portion of our commission refund that depends on the list price, we offer a refund of up to 15% of our fee for short sale purchases*.

What is a Short Sale?

A short sale listing is one in which the seller still owns the property, but owes more money on his mortgage than he will get from selling the property. Most often, more than one bank holds a mortgage on the property and each bank has to approve the sale. Additionally, if the seller has mortgage insurance. the insurer’s approval will be needed to move the deal forward. With multiple parties required to approve the transaction, the short sale process can be long and frustrating, and comes with no guarantee of success. Also, even if your short sale offer is accepted, the banks will usually ask you to buy the home as-is and won’t pay for any repairs discovered by an inspection.

How are Short Sales Different Than Foreclosures?

Short sale homes are still owned by the home-owner, while foreclosures are owned by banks. If the home-owner cannot sell the home through a short sale, the bank initiates foreclosure to try to sell the home directly, often in an auction. If the auction fails to turn up a buyer willing to pay at least what the bank was owed on the home, the home becomes Real Estate Owned (REO), where the owner is the bank. The bank then typically sells the property through a real estate agent.

How Do I Know If a Listing is a Short Sale?

Redfin flags listings marked as short sales by the listing agent or through the marketing remarks for a listing. You can exclude these short sales from your search by selecting Exclude short sales from your search options.

However, we are unable to flag listings marked as short sales in the listing’s agent-only remarks. So you may not realize that the property you are trying to buy is a short sale. When you schedule a tour to go see homes or submit an offer we’ll confirm that the homes you are looking at are not short sales.

The Bottom Line.

If you still plan to make an offer on a short sale, be prepared for a long haul. Our policy is to work with a buyer on only one home offer at a time, so if you change your mind and decide to back out of your short sale offer, let your agent know. You can then continue to work with Redfin on a standard home purchase, or search for another short sale home. One thing to keep in mind: instead of getting a portion of our commission refund that depends on the list price, as you do when making a standard home purchase, you’ll receive up to a 15% refund when you buy a short sale property with Redfin [1 ].

However, if you are selling your home as a short sale, you’re not eligible to receive a credit.