A Short Sale is a property transaction where the bank agrees to let the homeowners sell their home for less than their loan balance. In some instances, the Sellers don’t need to pay back the difference between what they owe and the income from the sales.


A short sale can be a great way to buy a home at a good price, whereas for the Seller who’s facing foreclosure it can be the best result in a bad situation. Banks tend to prefer short sales than allowing the situation to reach foreclosure. A short sale allows Sellers to avoid foreclosure and protect their credit rating and Buyers get a good price for the house, while the bank avoids a costly foreclosure. Short sales can take a bit longer to reach conclusion than a normal home purchase.

Lets say you owe R2 000 000 on your home and you can no longer make the mortgage payments. The first option is to refinance the home and secure a lower payment based on  a longer term or better interest rates. But If the house has lost value due to local market conditions (i.e. it would sell for R1 500 000) , refinancing isn’t feasible. Instead the bank would rather do a short sale at R1 500 000.

Situations Banks Can Do Short Sales:

  • Seller is experiencing hardship (i.e. divorce, bankruptcy, unemployment, job relocation)
  • Seller owes more on the mortgage than the home’s current value
  • Mortgage is in or near default status
  • Seller has no assets

Different bank shave different requirements, discuss with your bank what their requirements are and what the process is for doing a short sale.


The process of buying property through a short sale is similar to the standard home purchase process, you still apply for financing, ordering inspections etc. Complications in the process could arise, therefore patience is required through it.