Can I Stay In The House While A Short Sale Is Being Done?

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

Can you stay in the house while a short sale is being worked out with your lender?

Yes! Actually, your lender usually prefers you stay in the house, even if you are not paying the mortgage.

Why Does The Lender Want You Stay?

If you stay in the house, you are protecting the house, which means you are protecting the lender’s investment.

Here’s how you help the lender by staying in the house:

  • You are keeping the heat on, thereby protecting the house from freezing pipes and water damage. This is very important in the Louisville, KY area.
  • You are keeping the house ventilated, thereby reducing risk of mold.
  • By occupying the house you are reducing the risk of vandalism.
  • By keeping the lawn mowed you are keeping the county inspectors from attaching penalties against the house that eventually your lender may have to pay.
  • You are maintaining the house as a home, rather than leaving it as an abandoned property.

All your simple actions of staying in the house help protect the lender from additional losses. Some lenders stipulate that you MUST stay in the house to qualify for the short sale.

Sounds Unlikely The Lender Will Want You To Stay In The House?

One easy way to find out is to call your lender and ask. You must get transferred out of the collections department to a department that is set up to help you avoid foreclosure. These departments have a variety of names;  Home Retention Dept., Foreclosure Workout Dept., Short Sale Dept., or Loss Mitigation Dept.

Ask them the same question: Can I stay in the house during the short sale, even if I'm not making mortgage payments?

You may be pleasantly surprised by their answer.

You should also confirm your decision with an attorney.

So what's the next step?

If you are in the Louisville, Kentucky area, please call Dave Halpern, Real Estate Broker, for help with your short sale. Put a short sale Realtor specialist on your side. Your lender typically pays all commissions and closing costs, so you don’t have to. You have options. Please call me today.



Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East


(502) 664-7827



View Dave Halpern's profile on LinkedIndave_halpern twitterhalperndave_facebookDave Halpern QR CodeLouisville Foreclosure Realtors Dave Halpern


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Home Selling
Kentucky Jefferson County Louisville
Club Chaos
Expired Listings For Fun and Profit
Short Sales
Short Sales Specialists
The Ninety-ninth Percentile
short sale
real estate agent
stay in the house
avoid foreclosure
water damage

Spam prevention
Show All Comments
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Somtimes there are specifics in the lender guidelines that say the bank cannot approve the short sale if the home is vacant. I've had that happen a couple of times. They actually insisted that the seller move back in, and then they would approve it. Can you believe a seller said no? All she owned was a mattress and a dresser, a table and a sofa. It wasn't like she was family of six with furniture. On top of this problem, though, most insurance companies drop coverage after a 30-day vacancy.

Feb 20, 2011 04:13 AM #20
Patty Hylander

Very informative information.  Thanks for sharing ... may this article be reposted?

Patty Hylander

Feb 20, 2011 04:22 AM #21
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert


Michael #12 - Too bad they don’t let the sellers know

Kaera #13 – Calling the lender also adds credibility to the Realtor’s opinion

Harry #14 – Unfortunately the sellers get scared and leave

Colleen #15 – You’re right, some sellers trash the place, but that defeats their goal of selling

Philip #16 – That’s why I wrote this post, to help sellers realize they can stay for a while. It’s hard for sellers to believe that on one hand the lender wants them stay while on the other hand they’re getting ominous letters from the lender’s reps and lawyers.

Bill #17 – I always suggest the sellers to confirm with their lender, so it’s coming from them and not just from me

Tod #18 – At the end of the process sellers often say that if they would have known how long it would take, they would have stayed. But fear overtakes them.

Russel #19 – The banks and maybe government has a deed-for-lease program. I don’t know how that’s working out. If anyone has experience with that program it would make a good post.

Elizabeth #20 – Once the seller puts that chapter behind them they don’t want to go back. Your insurance point is critical, also. The seller could be exposed to liability without coverage.

Patty # 21 – Activerain has a reblog function that has been temporarily disabled. Many of us are waiting for it to be restored because it serves an important purpose of getting the word out to a wider audience.

Feb 20, 2011 04:51 AM #22
Charita Cadenhead
eXp Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)
I think some people are so afraid that they will be set out on the street that they leave prematurely to avoid embarrassment. Not a smart move given the length of the process.
Feb 20, 2011 04:53 AM #23
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Dave: This was and is a really great topic for a blog post. Is reblog working again yet?

Feb 20, 2011 06:44 AM #25
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Melissa #25,

Reblogging still seems to be on the fritz. A lot of members, like myself, rely on on reblogs to catch good posts we missed the first time around. Hopefully AR will restore it soon.

In the meanwhile, you may repost my post in another way. Also, based on your vast experience with short sales, I'd be interested in reading your insights on the topic. So many sellers endure additional unnecessary hardship by moving out sooner than they need to.


Feb 20, 2011 07:00 AM #26
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Charita #23 - Fear and lack of knowledge often the driving factor. It's hard to synchronize the move prior to closing on a short sale.

Erica #24 - I try to outline the timeline for sellers, but it is vague and never any guarantees. Sellers sometimes lose motivation to maintain the house because the illogical behaviour of the banks in the short sale process.

Feb 20, 2011 07:10 AM #27
Mary Jo Quay
EXP Realty - Minneapolis, MN
I Move You Home

Recently I've taken two listings where their prior agent advised them to move out immediately.  In one case, the agent wanted to purchase the house herself, and drive down the price.  The other case was misinformation.

Other important points of having someone living in the home are:

1. The bank can accelerate foreclosure on a vacant property

2. Homeowner's insurance does not cover a vacant home.

3. The neighborhood suffers with vacant buildings, sometimes there are city fines for a home being vacant for a prolonged period.

Feb 20, 2011 07:19 AM #28
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Mary Jo,

Thanks for adding the three vital points in your comment.

Feb 20, 2011 07:22 AM #29
Jeanne Kozak
RE/MAX In Action - Martinsburg, WV
REALTOR and Broker/Owner in WV and VA

I agree, keeping the home occupied is in the best interest of everyone, as long as they are keeping the home in good condition and do not make showings difficult. It is also important to talk with them about where they will go once the home is sold, and lettingthem know it may a short notice move.

Feb 20, 2011 11:17 AM #30
Sergio Rebollo Jr.
Real Estate TeamMates - Miami, FL

Dave...great post!!  Many Sellers need lots of guidance thoughout this process.  This is something new to them and they should feel fortunate to have someone with your knowledge.  Good luck!!

Feb 20, 2011 11:41 AM #31
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Dave -- Good info to pass along.  I like your never give up logo!

Feb 20, 2011 01:58 PM #32
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Jeanne #30 - Great points about the seller's responsibilites while they're staying in the house. That's a great topic for another post!

Sergio #31 - Thanks!

Chris #32 - "Never Give Up" is right for clients in default, for Realtors in this crazy market, and it keeps me focused when I'm negotiating with banks!

Feb 20, 2011 02:08 PM #33
Ute Ferdig
Ferdig Real Estate Solutions - Auburn, CA
Because Getting It Right Matters!

I have never heard of a lender who wanted the owner to move out while the short sale request was being evaluated.  I know that a vacant property can pose problems in more than 1 way.  The investor's guidelines may require that the property be occupied and moving out will also cause problems with the home owner's insurance once the property has been vacant for 30 days.  The lender may consider the property abandoned and change the locks.  Short sellers should be told that they don't have to move out during the short sale, but then they also should not wait till the last minute to find a new place to which they can move or you may have a problem on your hand if they are not out when escrow closes. 

Feb 20, 2011 02:10 PM #34
Jan Stevens
Coldwell Banker Pittsburgh - Cranberry Township, PA

This is good and important information. All banks are different, and even the process of trying to get an answer from someone can frustrate the already stressed-out and embarrassed seller. But staying in the home as long as possible makes sense for everyone.

Feb 21, 2011 12:14 AM #35
Kathryn Maguire (757) 560-0881 - Chesapeake, VA
Serving Chesapeake, Norfolk, VA Beach

I have never encountered a lender who wanted you to move out during a short sale. In fact, I know of lenders who send people by the house to check and MAKE SURE that someone is in the house and keeping up the property.

Feb 21, 2011 01:17 AM #36
Bill Travis
Captain Bill Realty, LLC - Gilbert, AZ

The seller should understand that the home is still their responsibility. If anyone gets hurt in that property, they could be held liable.

The insurance company needs to be notified if the seller has moved out. They may charge a vacant property rate. If the seller has moved out and not notified the insurance company, then they may not cover any damage or liablilty for the seller because it is now vacant and not properly insured.

Therefore, if a seller is contemplating moving out for any reason, they should consult with their insurance company and also notify the lender of the reason they're moving out. Then the lender may not consider it abandoned.

Feb 21, 2011 06:00 AM #37
Mihir Gandhi

You make some good points.  Sometimes the short seller acts in certain ways because is uninformed or unaware of his options.  It is difficult but in the circumstances it is a 'Win-Win' situation for all parties.

Feb 21, 2011 01:47 PM #38
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

This makes sense since homes seem to deteriorate when vacant though I'd be curious to see exactly how they responded to the questions.

Feb 21, 2011 03:12 PM #39
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

A vacant house is going to deteriorate rapidly over time.  No doubt the lender prefers them occupied and maintained. Thanks for elaborating the details on why.

Mar 04, 2011 12:57 AM #40
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Dave Halpern

Louisville Short Sale Expert
Ask me a question

Additional Information