Normal Texas Real Estate Closings vs. Short Sale Closings

 Posted on November 07, 2025 in Real Estate Law

While no two real estate closings in Texas are exactly alike, when it comes to short sales, even the most experienced buyer can be caught off guard. Unlike a "normal" real estate closing, which is generally very predictable, a short sale involves additional "layers," even when it goes as smoothly as possible.

Whether you are a first-time homebuyer or a seasoned investor, it is crucial that you understand how short sale closings differ from standard real estate transactions. An experienced Tarrant County, TX real estate lawyer can help you plan strategically, protect your earnest money, and potentially help you avoid months of unnecessary waiting.

What Is a "Normal" Texas Real Estate Closing?

In a "normal" Texas real estate closing, the buyer and seller agree on terms, inspections, and financing. The title work for the closing and the underwriting process happen simultaneously, with a typical 30-45 day window to closing day. The title company coordinates all the details, including signing, funding, and recording.

What is a Texas Short Sale?

A short sale usually occurs when a borrower is in trouble with his or her mortgage, but before foreclosure proceedings have begun. The homeowner works with his or her lender to sell the house for less than the remaining mortgage balance. Since the lender will take a financial loss, the lender must approve the short sale.

The seller in a short sale is typically motivated to sell the house and avoid foreclosure on his or her credit report. The bank is generally agreeable because taking a loss on the mortgage may be cheaper than going through foreclosure proceedings in the long run.   

What Are the Primary Differences Between Short Sales and the Traditional Homebuying Process?

There are several differences between short sales and "normal" homebuying. These include:

The Differences in Timelines Between a Short Sale and a Traditional Sale

A traditional closing has a predictable sequence, which is inspection, financing, title work, and closing. A short sale timeline is dependent on the lender’s internal review and valuation, appraisal delays, and multiple layers of approval if multiple entities service the mortgage or there is more than one lienholder. Short sales usually take between 90 and 180 days, and can take longer.

Earnest Money and Escrow Challenges Between Normal Closings and Short Sales

In a typical closing, the earnest money is applied to the purchase price of the home or refunded if the contingencies are not met. In a short sale, earnest money can be held for months, with no guarantee of closing. Some title companies will not open escrow until the lender acknowledges the short sale. Buyers should always negotiate "conditional release" clauses in short sales.

Title and Lien Complications: Normal Closings vs. Short Sales

Since short-sale properties are more likely to have multiple liens or judgments, this can cause significant complications for the sale. IRS tax liens, mechanic’s liens, or HOA assessments can delay or derail a short sale closing. Normal closings rarely face this level of lien clearance complexity.

Short Sale vs. Normal Sale: Inspection and Repair Negotiations

In a normal real estate sale, the buyer and seller will typically negotiate any necessary repairs, although sometimes a home is sold "as is." Being sold "as is" is much more common in short sales, and the lender is unlikely to approve repair credits. If appraisal issues arise, the buyer of a short-sale property may need to negotiate or provide additional cash at closing.

Practical Tips for Texas Short-Sale Homebuyers

Those considering a short-sale purchase should always use a realtor and real estate attorney experienced in short sales. The attorney will include "Approval Deadline" language in the purchase contract and request earnest money release protection in case of denial or excessive delays. Buyers should avoid making parallel offers unless the lender permits it, and should consider a short-sale specialized title company that is familiar with lender demands in short sales.

Contact a Hood County, TX Residential Real Estate Lawyer

Because of the risks involved in buying a short-sale property, it is wise to consult with a Tarrant County, TX real estate attorney from Cain & Kiel Law. Attorney Cain is a certified mediator and the owner of Trinity Abstract & Title in Cleburne. Call 817-645-1717 to schedule an initial attorney meeting.