Have your Realtor find out when the Notice of Default was filed. It can easily be looked up in the tax rolls. You may find out that you have more time than you think. The owners have to go through a lengthily process to complete their short sale. I would find out where they are in the process before I'd tell them. Also, they may be opting to foreclose instead of completing a short sale. Many scenarios involved.

I agree with Bruce below that you are doing the best thing for yourself by getting your credit improved. That way if you don't get this house, for whatever reason, you can purchase another home.

Hi Belinda,

Your situation presents some unique challenges, but is not impossible. A lot will depend upon your landlord/seller's current situation regarding his default status with his lender, who the lender is, how many loans he has on the property, and his willingness to "work" with you. Short sales can take a long time to process and lenders in general have been working very hard to improve this process in an effort to make short sales more successful and avoid the foreclosure process... but to do this they need to have a good offer from a "qualified" buyer. Since you are not a "qualified" buyer yet, what you need in this case is a little time to become one! Now, depending upon what stage your landlord/seller is in default will determine if there is enough time left in the foreclosure process to allow you the time you need to improve your credit. Assuming there is enough time for this and the landlord/seller is willing to work with you (exclusively) to allow you the time you need to obtain a Pre-qual or better yet, pre-approval letter from your new lender you will have a chance to make this work! Once you have this letter you can submit it through your agent, along with your offer to purchase the home you live in. I would encourage you to have a conversation with your landlord/seller regarding his situation and determine his willingness to work with you (exclusively) along these lines. If you have been a good tenant and offer to continue to pay your rent and occupy the property it should have the positive effect that you are looking for. There are several pitfalls along the way here that you should discuss with your current Realtor. Your landlord/seller must agree to work with you exclusively... as an open listing on the market could easily result in someone else making and getting their offer accepted before you are ready to make your offer. Additionally, the short sale process can be a complicated one in which first and second trust deed holders can nullify a sale at anytime during the process for reasons that are seldom explained to either your landlord/seller or you as the buyer. You are doing the right thing by getting your credit cleaned up and becoming a qualified Buyer. Giving it your best effort to buy the home you are currently living in now is also a good idea. But once you are a qualified buyer there will be many other options available to you in the event that the short sale on the home you are in does not work out. Best of Luck!