Can I buy back the house I’m short selling?

Many homeowners would like to remain in their homes – but with a considerably lower mortgage payment and a smaller loan balance.

Thus the question arises: Can a seller buy back the house he is short selling? The answer is “Probably not.” In fact, most lenders will not allow you to sell to a relative, a close friend, or a business associate.

Most short sale contracts require both the buyer and the seller to certify that theirs is an “arms length” transaction.

What is an “arms length” transaction?

According to the Dictionary of Banking terms, an “arms length” transaction is: “A transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest. Pricing based on such transactions is the basis of fair market valuations.”

If you were to purchase the house yourself or to sell it to someone close to you, the bank might assume that they weren’t getting the highest possible price for the house. And of course, the highest possible price is their goal.

However, while we have not witnessed it, we have been told that some banks will approve a non-arms length transaction if it appears to be in the bank’s best interests. Thus, it can’t hurt to ask. Just don’t be surprised when the answer is “no.”

Depending upon your bank and its policies, you may be able to refinance with a principal reduction or to work out a loan modification.

If a loan modification is your choice, do come and see me before making application.

I have the same software that the banks use to determine whether or not you’re qualified – and I can tell you within minutes what it might take weeks or months to learn from the bank. If it does appear that you qualify, I can also give you information on how to present your case in a manner that gives you the best chance of success.

If neither a refinance nor loan modification will work, list your home as a short sale, get it sold, and move on with your life. The sooner you make the decision the sooner you’ll be out from under the burden of high payments. Then, in just 2 or 3 short years, you’ll be eligible to purchase another home.

If you own a home in California, and want to put it on the market as a short sale, I can help. I’ll be glad to answer your questions and explain how a short sale is transacted.

I am a short sale specialist. I’ve been successfully handling short sales for the past 10 years, with a 98% success rate. I’d be pleased to help you too, so feel free to call with any questions.

To reach me, just call 619-929-1413 or write td@tomdunlap.com.


Please note that the information provided on this short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.