Buying a short sale home means making an offer that the seller's lender must approve, because the price will not cover the seller's mortgage. Expect a wait: for Fannie Mae loans the servicer answers within 30 calendar days of a complete package and offer, then the sale must close within 60 days of approval. In Utah, check the county record for a notice of default, since a trustee sale can follow after three months and there is no redemption after it.
At a glance
| Fannie Mae answer to offer | 30 calendar days after complete package and offer |
|---|---|
| Fannie Mae closing after approval | 60 calendar days |
| FHA minimum net proceeds | 88% / 86% / 84% of as-is value by marketing days |
| Utah state-approved short sale addendum | None on the state list |
| Herriman typical home value | $601,499 (Zillow, August 2026) |
How is buying a short sale different?
In a short sale, the seller owes more than the home will sell for, so the seller's lender has to approve the price before the sale can close. You negotiate with the seller first, but the final yes comes from a lender you never meet, working to its investor's rules. The seller's side is explained on what a short sale is and why lenders approve one.
That changes three things for a buyer. The timeline is set by the lender, not the seller. The price has to satisfy the lender's own valuation. And the home is usually sold as is, because the seller has no money to fix it and the lender rarely pays for repairs. Buyers who can live with those conditions sometimes find homes that are priced to market with less competition; buyers who need a firm moving date often do better with a regular listing.
How to buy a short sale, step by step
1. Get preapproved and plan for a long wait
Get a full loan preapproval before you offer; the seller's lender will want proof of funds or a preapproval letter with the package. Ask your loan officer how long your approval and rate lock can stay valid and what an extension costs, because the seller's lender may take weeks to answer. Freddie Mac's weekly survey put the average 30-year fixed rate at 7.4% for the week of October 8, 2026, so a lapsed lock can change your payment.
2. Use an agent who has closed short sales
A buyer's agent who has done short sales knows how to write the offer, what the listing agent's package needs and how to keep the file moving. Ask how many they have closed and how long those took. Questions worth asking any agent are on choosing a short sale realtor.
3. Find short sale listings in Herriman
Short sales are listed on the MLS like other homes, usually with remarks such as "subject to lender approval" or "short sale". Investor rules require real marketing: Fannie Mae requires an active MLS listing for at least five consecutive calendar days, including a Saturday and a Sunday, before the servicer recommends a sale. Ask your agent to set an MLS search for short sale listings in Herriman and nearby ZIP codes.
4. Check the liens and foreclosure status
Salt Lake County's recorded-document index can be searched free online, without logging in, so you or your agent can see whether a notice of default has been recorded and when. In Utah the trustee must wait at least three months after recording a notice of default before giving notice of sale (Utah Code 57-1-24). A recorded notice of default tells you a foreclosure clock is running. The full Utah sequence is on how foreclosure works in Utah.
5. Check HOA dues and liens
Many Herriman neighborhoods have HOAs. In Utah an HOA has a lien for unpaid assessments, collection costs and certain fines (Utah Code 57-8a-301), and it can foreclose that lien. Ask for the association's name, look it up in the Utah HOA Registry, and make sure the purchase contract has unpaid HOA balances paid or released at closing. Dues and HOA names for the city are on Herriman homes and HOAs.
6. Decide what to offer
Base the price on recent comparable sales and the home's condition, not on what the seller owes. Utah is a non-disclosure state, so sale prices are not public record and comparable sales usually come from the MLS through an agent. A very low offer is likely to be countered, because the lender values the home itself. If the seller's loan is FHA-insured, the offer must net at least 88% of the as-is appraised value during the first 30 days of marketing, 86% during days 31 to 60 and 84% during days 61 to 120.
7. Write the offer with a short sale addendum
Use your normal purchase contract plus a short sale addendum or contingency. Utah's state-approved real estate forms do not include a short sale addendum, and no public Utah association form was found for this site, so ask your agent which addendum they use and read it before you sign. The next section covers what such an addendum typically includes.
8. Put down earnest money
Earnest money shows good faith, as in any purchase. Make sure the contract says when it is due, who holds it and when it comes back to you if the lender does not approve the sale. Ask whether the deposit can wait until the seller's lender approves the price.
9. Inspect the home
Short sale homes are often sold as is, and the seller may not have kept up maintenance. Schedule inspections inside your due-diligence period, and check whether that period starts at contract signing or at lender approval. Inspecting before approval saves time; inspecting after approval avoids paying for an inspection on a deal the lender may decline.
10. Wait for the lender's decision
The listing agent sends your offer and the seller's package to the servicer. Fannie Mae's guide has the servicer acknowledge an initial short sale offer within five business days and give its answer within 30 calendar days of receiving a complete package and the offer. Other investors set their own timelines. How the seller's side works is on the short sale timeline and lender approval steps.
11. Answer a counteroffer
The lender can approve, counter or decline. A counter may ask for a higher price or ask the buyer to pay costs the lender will not. Fannie Mae's guide gives the servicer ten business days to answer a revised offer, so a quick, complete response keeps things moving.
12. Close by the lender's deadline
Approval letters carry a closing deadline. Fannie Mae requires an approved short sale to close within 60 calendar days of approval unless the servicer gets written approval for more time. At closing, all parties to a Fannie Mae short sale sign a Short Sale Affidavit (Form 191). Have your loan, appraisal and insurance ready before the approval arrives.
What does a short sale addendum cover?
A short sale addendum adds terms to the purchase contract for the lender approval the deal depends on. The form your agent uses decides the exact wording, so treat this as a checklist of what such addenda typically address, not a description of a specific Utah form.
Terms a short sale addendum typically includes
- That the sale is contingent on written approval from every lien holder.
- A deadline for the seller to get approval, and what happens if it passes.
- Whether the buyer can cancel before approval and get the earnest money back.
- When the buyer's due-diligence, financing and appraisal periods start.
- What happens if the lender approves a different price or different terms.
- Whether the seller can keep taking backup offers.
- That the seller cannot promise the lender will pay any particular cost.
Utah forms and approval letters
Utah's list of state-approved real estate forms does not include a short sale addendum, so check with your agent which form they will use and read it with them. Utah's real estate rules also bar a licensee from disclosing or using a short sale approval letter outside the purchase it was issued for (Utah Admin. Code R162-2f-401b), so the letter is for your transaction only. For legal questions about contract terms, ask a Utah real estate attorney.
What are the risks of buying a short sale home?
The lender can decline
Nothing obliges the seller's lender to approve. It may decline outright, or the seller may withdraw if the hardship changes. Your contract's cancellation terms decide what you get back.
The wait can outlast your plans
Only parts of the timeline are written down, and missing documents, a second lien or a mortgage insurer can add weeks. Leases, rate locks and moving dates all need slack.
The lender may counter at a higher price
The lender orders its own broker price opinion or appraisal. If that value is above your price, expect a counter, and decide your walk-away price before it arrives.
A trustee sale can happen first
If the notice of default is recorded and the clock runs out, the trustee can sell the home at auction between 8 a.m. and 5 p.m. at a courthouse serving the county. A trustee can postpone a sale by announcement, but there is no right of redemption after a Utah trustee sale, so if the auction goes ahead your contract is effectively over. Comparing the two outcomes, see short sale vs foreclosure.
The home is sold as is
Repairs, appliances and deferred maintenance are usually the buyer's problem. Budget for them and use the inspection to price them.
Second liens, HOA balances and taxes
Every lien has to be paid or released at closing. Fannie Mae and Freddie Mac cap payments to second lien holders at $6,000 in total, and a second lender that wants more can stall the sale. Unpaid Salt Lake County property taxes become delinquent December 1, and unpaid HOA dues carry a lien. These must be cleared before you get clean title.
Your loan approval or rate lock can expire
Preapprovals, rate locks and appraisals all have expiration dates. Ask your lender before you offer what it costs to extend each one.
The appraisal may not match the price
Your lender's appraisal is separate from the seller's lender's valuation. If yours comes in low, you may need more cash or a renegotiated price, and the seller's lender must approve any change.
The seller's lender may not pay some costs
Lenders approve only certain seller costs. Fannie Mae allows a customary commission of no more than 6% of the price and seller title and settlement charges, and bars non-customary third-party fees and any commission paid to the borrower or the purchaser. Costs the lender refuses can be pushed to the buyer in a counter.
You must be an arm's length buyer
Freddie Mac requires an arm's length sale, and Fannie Mae has every party sign a Short Sale Affidavit at closing. A relative, friend or business partner of the seller buying the home so the seller can stay should expect the lender to refuse or to require disclosure. Never sign an affidavit that is not true.
Who pays the costs in a short sale purchase?
The seller's lender decides which seller costs come out of the sale. Anything it will not pay either comes out of the commission, gets dropped or is pushed to the buyer in a counteroffer. Read the listing remarks and the counter for any cost the buyer is asked to cover.
Some listings ask the buyer to pay a short sale negotiation or processing fee. Fannie Mae bars non-customary third-party fees from the sale proceeds, and Utah's real estate rules bar a licensee from charging a fee equal to the gap between the lender-approved price and the amount needed to clear title and close (Utah Admin. Code R162-2f-401b). If you are asked to pay a fee like that, ask in writing who receives it, whether the seller's lender has approved it and whether it appears on the closing disclosure. Make sure the final approval letter, the purchase contract and the settlement statement all show the same price and the same costs.
Short sale or trustee sale auction: what changes for a buyer?
A buyer who misses a short sale may see the same home at a Utah trustee sale. The two purchases work very differently. At the auction, anyone, including the lender, may bid, the trustee may require a deposit stated in the notice of sale, and a bid is considered an irrevocable offer. There is no inspection period or financing contingency, and the trustee's deed conveys the home without right of redemption.
A short sale keeps the protections of a normal purchase: inspection, appraisal, financing and title insurance. The trade is time. Homes in the earlier stage, after a missed payment and before any sale, are described on pre-foreclosure homes in Utah.
Tips for a smoother short sale purchase
- Send a complete offer the first time: signed contract, addendum, preapproval or proof of funds and earnest money receipt.
- Ask the listing agent whether the seller's package is already with the servicer, and whether there is a second lien or HOA balance.
- Check the county record for a notice of default and note the date.
- Keep your loan file current while you wait, and update pay stubs and bank statements when your lender asks.
- Agree with your agent on a date when you will stop waiting and look elsewhere.
- Compare the approval letter line by line with your contract before you remove any contingency.
Are short sales a good deal?
Sometimes, but not because the seller is desperate. The seller's lender sets the floor using its own valuation, so a short sale is usually priced near market value for its condition. The savings, when there are any, tend to come from less competition among buyers who will tolerate the wait, and from pricing in repairs the seller cannot make. For an FHA-insured seller loan, the lender must net at least 84% to 88% of the as-is appraised value, depending on marketing time, which shows how close to appraisal the price is expected to land.
A short sale is a good fit if you have a flexible move date, a financing plan that can wait, and budget for repairs. It is a poor fit if you are selling another home on a deadline or need to close quickly. If you are on the seller side, see your options to sell a Herriman home with little or no equity.
Local checks for a Herriman short sale
A few Herriman details are worth checking on any short sale address before you offer.
- City limits: ZIP 84096 is not the same as Herriman. It also covers part of Riverton and a large unincorporated area, and a small part of Herriman lies in 84065. The city decides services and tax district, so confirm the parcel is inside Herriman.
- Tax district: most Herriman districts had a 2025 total rate of 0.010826, but the Olympia public improvement district carried 0.014826 and the Auto Mall and Retail districts 0.020826. Look up the parcel on the Salt Lake County parcel search.
- HOA registration: an HOA that is out of compliance with Utah's registration rules cannot create or enforce an assessment lien during that period, so check the registry entry as well as the dues balance.
- Water account: Herriman needs a settlement statement or closing disclosure to open a new water account, and a $200 deposit applies.
Example: an offer on a Herriman short sale
This is an illustration, not a real listing. Zillow's typical home value for Herriman was $601,499 in August 2026, down from $614,921 in August 2022. Suppose a home in that range is listed as a short sale, and the seller's FHA loan has a $640,000 payoff.
| Example line | Amount |
|---|---|
| FHA as-is appraisal (assumed at Herriman's typical value) | $601,499 |
| Minimum net to lender, days 1 to 30 of marketing (88%) | about $529,319 |
| Minimum net to lender, days 61 to 120 (84%) | about $505,259 |
| Buyer's offer | $575,000 |
| Assumed commission and seller closing costs | $40,000 |
| Net to lender | $535,000 |
The $575,000 offer nets $535,000, which clears the 88% tier, so it meets FHA's minimum, though the servicer can still delay or deny an offer that meets the tier if more marketing would likely bring a higher price. If the home is a primary residence, a 2025 tax bill at the standard Herriman rate would be about $3,573 a year on a $600,000 value (taxed on 55% of value at 1.0826%), so budget for property tax as well. More on how FHA sellers qualify is on FHA short sale rules.
Check the contract before you sign
A short sale purchase has more contract terms than a regular one: lender approval deadlines, earnest money conditions and due-diligence timing. Have your agent explain each one, ask a Utah real estate attorney about anything you do not understand in the addendum or approval letter, and confirm with your loan officer that your financing can wait for the seller's lender. Before closing, confirm with the title company that every lien, including any HOA lien and delinquent property tax, will be paid or released.
Frequently asked questions
What are the risks of buying a short sale home?
The seller's lender may decline, take weeks to answer or counter at a higher price. A trustee sale can go ahead first if the foreclosure clock runs out, and Utah has no right of redemption after a trustee sale. The home is usually sold as is, second liens and HOA balances must be cleared, and your rate lock or loan approval can expire while you wait.
What is the 3-3-3 rule for buying a house?
It is an informal budgeting rule of thumb that circulates online in several versions, not a lending or legal standard. For a short sale, the more useful rules are the written ones: the seller's lender sets the price floor, its timeline and its closing deadline. Base your budget on your own loan approval and a cash reserve for repairs, since short sale homes are usually sold as is.
Can a buyer back out of a short sale?
Usually yes before the seller's lender approves, if the contract makes the sale contingent on approval and lets the buyer cancel. After approval, your rights depend on the contract's other contingencies, such as inspection, financing and appraisal. Read the addendum's cancellation and earnest money terms before signing, and ask a Utah attorney about anything unclear.
How long can a short sale last?
There is no fixed limit. For Fannie Mae loans, the servicer answers within 30 calendar days of a complete package and offer and the sale must close within 60 days of approval, but incomplete files, second liens and counteroffers add time. A recorded notice of default sets an outside limit, because a Utah trustee sale can follow after the three-month minimum.
Who loses money in a short sale?
The seller's lender or loan investor takes the loss by accepting less than the balance. A second lender usually takes a capped payment, which Fannie Mae and Freddie Mac limit to $6,000 in total. The seller loses equity and any down payment. The buyer does not lose money from the shortfall, but pays for inspections and may wait a long time.
What is a reasonable offer on a short sale?
One close to market value for the home's condition, based on recent comparable sales. The seller's lender orders its own valuation and counters offers well below it. If the seller's loan is FHA-insured, the offer must net at least 84% to 88% of the as-is appraised value depending on how long the home has been marketed. Your agent can pull comparables from the MLS.
Can you buy a short sale with an FHA or VA loan?
Yes. Your financing is separate from the seller's loan, so a buyer can use a conventional, FHA, VA or cash purchase if the home meets the loan's property standards and the appraisal supports the price. Because short sale homes are often sold as is, condition problems can matter more for government-backed loans. Ask your loan officer before you offer.
Sources
- Fannie Mae Servicing Guide: D2-3.3-01, Fannie Mae Short Sale
- Freddie Mac Seller/Servicer Guide: Section 9208.1
- Freddie Mac Seller/Servicer Guide: Section 9208.2
- HUD: Mortgagee Letter 2025-12
- Utah Department of Commerce: State Approved Forms
- Cornell LII (Utah Admin. Code): R162-2f-401b
- Utah Legislature: Utah Code 57-1-24
- Utah Legislature: Utah Code 57-1-25
- Utah Legislature: Utah Code 57-1-27
- Utah Legislature: Utah Code 57-1-28
- Utah Legislature: Utah Code 57-8a-301
- Utah Legislature: Utah Code 57-8a-302
- Utah Department of Commerce: HOA Registry search
- Salt Lake County Recorder: Property Search - Data Services
- Salt Lake County Treasurer: Dates & Deadlines
- Salt Lake County Auditor: Tax Rates by Area (2025 listing)
- Utah Legislature: Utah Code 59-2-103
- Deseret News: Are you entitled to know what your neighbor paid for his house?
- Utah Legislature: Utah Code 57-8a-105
- U.S. Census Bureau: 2020 ZCTA5-to-Place relationship file
- Herriman City: Utility Billing
- Herriman City: Welcome to Herriman
- Freddie Mac: Primary Mortgage Market Survey
- Zillow Research: Home Value Index (Herriman city)