Home Buying in Front Royal>Question Details

Larsccw, Home Buyer in Linden, VA

Should we look into Renting an empty Short Sale that we have a Contact on?

Asked by Larsccw, Linden, VA Tue Nov 30, 2010

We have a contract on a Short Sale home that is now in the Bank's hands for approval. (It’s only need a month of waiting thus far)

The Short Sale has been approved as a Short sale per a VA Loan/Bank

The Home is currently empty and has been for at least 4 months.

We would like to investigate the option if there is one, of looking into a “Pre Occupancy”/ Rental agreement until the process works itself out.

Is this something that happens at all?

Does it hinder the short sale process?

Is it possible to do without affecting the “Hardship” of he owner?

Can it be worked or is it possible to get it set to where the rent payments are going towards the purchasing price of the home?

Help the community by answering this question:


Check with your Realtor for advice. However, a few thoughts:

You certainly could rent the property from the owner. However, recognize that the short sale could fall through. Thus, you could be renting a property on which you would not have an approved (by the bank) contract. Worse, perhaps, the house could be foreclosed upon. Those two tracks--shortsales and foreclosures--often proceed simultaneously. So you might end up renting a property that's been sold to someone else. So, there are some risks involved.

Does it happen at all? Probably yes.

Does it hinder the short sale process? Would it affect the "hardship" of the owner? It could, if part of the owner's hardship was his claim that he'd been unable to rent the property and thus wasn't able to pay the mortgage. Realistically, though, the owner is probably so far behind now that an infusion of cash from your rental would still leave him in a hardship position. Still, that's definitely something to discuss with your agent.

Can some of the rent payments go towards the purchase price of the home? Probably not. The owner has submitted a signed contract to the lender for its approval. The contract is for a specific amount of money. There'd be no way now for the owner to give you a credit toward the purchase price (thus reducing the purchase price) for any rent you pay. And be very careful: Lenders don't want the seller to profit at all--to receive any money--from a short sale. There are any number of ways a lender could look at your proposed transaction and envision the seller profiting from the process . . . . or at least receiving money from you (in the form of rent) outside the short sale process.

So, run all this by your Realtor and see if something can be structured that won't endanger the short sale.

Hope that helps.
0 votes Thank Flag Link Tue Nov 30, 2010
Don Tepper, Real Estate Pro in Burke, VA
Keep in mind that most banks want the home to be owner occupied or vacant and if you rent it out, it may hinder the bank's approval of the short sale. You might consider speaking directly to your mortgage lender about this.
0 votes Thank Flag Link Tue Nov 30, 2010

I would NOT do that - short sales are complicated enough. Why make them even more complicated?

It can also hurt your negotiating power, as a buyer, with the seller's lender.
Pre Occupancy has a potential to cause problems even in traditional transactions - short sales are far more complex than traditional transactions. Why not wait and move in after the settlement?
0 votes Thank Flag Link Tue Nov 30, 2010
to whom would you pay rent? The current owner? the bank? If you pay the owner, will they pay the mortgage? Or will they just pocket the money?
Your last point sounds interesting.
You have nothing to lose by asking your agent to run it by the listing agent and the bank's negotiator. Who knows, something might work out. The downfall would be if after all this, the bank said no to your offer. Then where would you be?
0 votes Thank Flag Link Tue Nov 30, 2010
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