Risks of a short sale for the buyer include all imaginable permutations of the following. Note that in a short sale the contractual rights of the buyer are much muddier than in a typical transaction, which in turn can contribute to these possible risks:
- Lender sits on its hands, and/or listing agent or short sale negotiator fails to follow up with bank, such that the bank never even gets around to considering the short sale offer; property eventually goes through foreclosure.
- Lender eventually makes a decision several months after you submitted the offer, and the answer is “No.” Without any sort of counteroffer.
- Lender eventually response with a counteroffer much higher than your top number.
- After seller gets your offer and forwards to the bank, some other buyer submits a substantially better offer. You never learn of this until long after the other offer has been approved by the lender.
- The seller changes her mind about selling after the bank approves the short sale amount. In retrospect, it is apparent that the seller never intended to sell but instead used the short sale process as leverage in an effort to renegotiate the loan. (This specifically happened to a client of mine.)
In a nutshell, the primary risk is, notwithstanding your extreme good faith and nearly unbelievable patience, the deal has a good chance of blowing up even at the last second, and as the buyer you have little recourse.

Best of luck, Pete, and thanks for the comment.

I think there’s huge potential in the Seattle real estate market for flat fee agents. Many buyers and sellers already have a good idea of what they want to buy/sell at and don’t need the full fledged services of an agent. Great work and it’s good to see you saving people so much money.

- Marisa

You needed to ask this question BEFORE you approved the terms of the short sale and closed. The short sale approval letters generated by each lender should indicate whether or not you are being released from the balance of the debt. If you are, then congrats; if not, then you should have negotiated that term further before closing on the short sale. The best you can do at this point, if you do remain liable, is to contact the lender to see if they will accept satisfaction for something less than the full amount due. Good luck.

I just went through with a short sale process and had twp mortgages on the house and the bank accepted it, it closed this last month what do I do now to insure that they might not come after me for the balance. Sincerely Larry