Short Sale

A short sale is a real estate transaction in which a lender may agree to accept less than

the total amount owed on a mortgage in order to allow the property to be sold. This

typically occurs when the property’s market value is lower than the outstanding loan

balance and the lender determines that approving the sale may be preferable to

proceeding through foreclosure.

In a short sale, the homeowner usually remains the legal owner of the property during the process and works with the lender to obtain approval for the sale terms. Because lender approval is required, short sales often involve additional documentation and review timelines compared to traditional real estate transactions.

Short sale approvals are not automatic and are evaluated by the lender based on multiple factors, which may include the property’s value, the borrower’s financial circumstances, and the overall status of the loan.

• May allow the property to be sold before a foreclosure is completed
• Can provide a structured exit when the loan balance exceeds the property’s market value
• Often results in a more orderly resolution compared to foreclosure
• In many cases, the homeowner remains involved in the sale process during lender review
• Is generally viewed as less damaging to a borrower’s credit than a completed foreclosure
• After a completed short sale, borrowers may be eligible to qualify for new mortgage financing sooner than after a foreclosure, often within several years, depending on loan programs and individual circumstances
• In Florida, short sales often do not result in a deficiency judgment, whereas a foreclosure may allow a lender to pursue a deficiency for the unpaid balance, subject to applicable laws and court approval

• Requires lender approval, which is not guaranteed
• The process can be time-consuming and documentation-intensive
• Offers must meet the lender’s valuation and approval requirements 
• Timelines may be influenced by foreclosure proceedings or court schedules
• Outcomes vary based on:
  • Lender policies
  • Loan type
  • Individual borrower circumstances
     

Because short sales involve lender approval and coordination between multiple parties,

some homeowners choose to learn about other possible options for addressing a

pending foreclosure, depending on their goals and circumstances. Understanding how

short sales generally work—and how they compare to foreclosure—can help homeowners approach conversations with real estate professionals, lenders, or other qualified professionals with clearer expectations.