How Can I Wholesale a Short Sale?

Short Sales…. ahh, love em. A few more obstacles than foreclosures and you need patience (they can take a loooooong time to get done), but when you become the problem solver for the financially challenged seller, the solution for the lender, and create a profit for a buyer – you can net some of your highest profits.

So again, not going to go through the entire process here. For a detailed description, you can check this article on how Short Sales work:

But here are the Cliffs notes explaining all you REALLY need to know at this point:

When a homeowner cannot make their mortgage payments, the lender will initiate the foreclosure process to take back possession of the property. The lender’s first step is to record a Notice of Default (or Lis Pendens) which puts the seller into Pre-foreclosure. If they cannot pay the mortgage, cannot sell the property for the amount owed to the lender, and want to avoid foreclosure, the homeowner can initiate a Short Sale.

A short sale is simply where the bank will accept less than the amount owed on the property. In a traditional sale, the buyer and seller agree on a price and the sale takes place. During a short sale however, the buyer and seller agree on a sales price (for less than the amount owed to the lender), and then the lender must also approve the proposed amount.

The process can be lengthly because first off, banks are slow…. but also because there’s a long checklist of items to prove that the seller cannot afford to pay the mortgage, and that a short sale is the only option to avoid foreclosure. Proof includes: A hardship letter, income proof statements, tax returns, monthly expenses, proof of foreclosure notices received, proof that other loan modification efforts were denied and more.

Often times an Attorney or a Realtor will handle the Short Sale and act as the liaison between the parties (buyer, seller, lender)  – collecting and submitting information and guiding the deal through to closing.

So that’s all good…. but how do you make money from Short Sales? Here’s the most efficient way to Start:

  • Use the MLS or MLS portals (, or – has more info but requires a monthly subscription fee) to search for Pre-foreclosures. You can also try searching for keywords such as: “pre-foreclosure,” “third-party review required” or “subject to bank approval.”
  • Do your homework to see what the properties are worth and start making some offers. Pick up the phone, call the listing agent and email a written offer on the State approved purchase and sales agreement for real estate (called the FARBAR here in Florida), along with the state approved short sale addendum (you can usually find these by doing a quick Google search)
  • The listing agent will send you additional requests for information and 9 out of 10 times, the seller will agree to an offer that is favorable to you…. it feels good but is ultimately irrelevant – you have to play the waiting game and wait for the lender to approve.
  • [PRO HINT] – If you can send documentation proving to the bank that the house is in bad condition, you can get a more favorable offer accepted. This includes things like a General contractors inspection report, photos of mold, etc.

Once the lender approves the Short Sale, you can double close on the property and sell to an end buyer for a profit.

Here’s What You Need to Be Aware of:

You cannot assign a short sale… you need to do a double closing (if you don’t know the difference, I’ve got descriptions in the “How to Wholesale Real Estate” category).

More and more short sales include deed restrictions – most commonly, you cannot transfer the property for 90 to 120 days.

So how can you get around this? The Naysayers say you can’t. Search any other real estate forum and most people will say it can’t be done anymore. And here’s where the misinformation pisses me off –  because you can. I know because I actually do it.

STOP MAKING EXCUSES. There’s a solution to any problem. Usually, the more difficult the problem, the less competition there is, and the more money there is to be made when YOU solve it.

The first way is to get creative – draw up paperwork between you, your end buyer and your title company, essentially holding the deed with your end buyers name on it in escrow, to be transferred after 90 days (or however many days your contract stipulates).

Another option would be to find a hard money lender that will put the money up for you (for a fee) during the no-resale period.

Next, you can purchase the property in the name of an LLC – here in Florida an LLC can be created online, in about 10 minutes, for about $120. Then, simply sell the LLC to the end buyer. The owner of the property does not change (just the owner of the company) and therefore, does not violate the deed restriction.

My last and preferred option is to purchase the property in a Land Trust.

AGAIN WITH THE MISINFORMATION AND THE B.S. – As I’m writing this, there is a very respected, very prominent Real Estate Investing Forum telling new investors that Banks will not allow Short Sales to be sold to a land trust. Then how is it that I did that less than 60 days ago? How is it that the head of my local REIA, does it on a regular basis? I’ve got the paperwork to prove it.

Similar to buying in an LLC and selling the LLC, you name your land trust (you don’t need to pay to have it formed), put the name of the trust on the contract as the buyer, and name yourself as trustee. Draft the documents for the trust, name yourself as trustee and then name a beneficiary (I use my LLC). Head to a bank or Notary and get the trust document notarized. Then submit a copy of the trust with  your offer.

At closing, simply resign as trustee and assign the beneficial interest of the trust to your end buyer for a fee.

*Note that you need to check if this works in your individual state. This works wonders here in Florida. It eliminates double closing costs and allows us to circumvent resale restrictions. Again, I’m not telling you that this works based on theory, I’m telling you that it does because I actually do it.

So I tried to keep this pretty basic and conceptual. If you need further clarification on anything here, just ask a question in the comments below. If you also ask for a copy of the land trust that I use, I’ll be happy to email it to you.

Now what other types of deals can you wholesale? I’m about to Debunk yet another myth. Click here to take a look at how to flip deals hiding in plain site.


  • Rafael

    Mike, Thanks for keeping it real. i just found your site 24hrs ago and I cannot stop looking at it. I have about 10 deals under my belt and thought I was well versed and herd it all, but you are blowing me away with things I didn’t know. Please keep it coming. I would like a copy of your land trust docs if you wouldn’t mind.

    • Mike Hill

      Hey brother, thanks for the kind words and positive feedback… much appreciated…. and congrats on those 10 deals! This is my old website (so I don’t check here too often). I’m keeping it up because… why the heck not!? :) I’ll be placing all my new content on the new site at If you head there under the “Free training section” you can find and download the land trust doc. Look forward f to hearing from you!