What is a short sale? A short sale occurs when a homeowner sells for less than the mortgage balance, with lender approval. The lender accepts less than full payoff to avoid foreclosure costs. Short sales can offer buyers below-market prices, but the process is slower and more complex than standard transactions.
3–6 MoAverage Approval Time
LenderMust Approve Price
5–20%Potential Savings
As-IsTypical Condition
How Does a Short Sale Work?
- Listing and offer (Week 1-4): Home listed below market value. Buyers submit offers.
- Seller submits to lender (Week 2-6): Short sale package including financials, hardship letter, and contract.
- Lender review (Month 2-4): BPO or appraisal ordered, offer evaluated against loan balance.
- Lender response (Month 3-6): May approve, counter, or deny. Multiple lien holders each approve separately.
- Closing (30-45 days after approval): Standard closing with inspections and title work.
What Should Buyers Know?
- Timeline uncertainty: Wait 3-6 months for approval. The lender can reject your offer at any time.
- As-is condition: Budget for repairs and deferred maintenance.
- Multiple offers: Lenders sometimes solicit additional offers during review.
- Title issues: Additional liens (HOA, tax, judgment) must be resolved.
Need Help Navigating a Short Sale?
Barrett Henry, Broker Associate at REMAX Collective, has 23+ years of real estate experience including short sale transactions. Call (813) 733-7907 or contact Barrett.
How Does a Short Sale Affect the Seller?
- Credit impact: Less severe than foreclosure. Generally 50-150 point drop recovering over 2-4 years.
- Deficiency judgment: In Florida, lenders can pursue the difference. Many waive this in the approval letter.
- Tax implications: Forgiven debt may be taxable. Consult a tax professional.
- Future purchase: Eligible for conventional mortgage after 4 years (2 with extenuating circumstances), FHA after 3 years.
Short Sale vs. Pre-Foreclosure vs. Foreclosure
| Factor | Short Sale | Pre-Foreclosure | Foreclosure |
|---|---|---|---|
| Seller | Homeowner (with lender approval) | Homeowner | Court/Bank |
| Timeline | 3-6 months for approval | Varies | Court-set auction date |
| Inspections | Yes (typically as-is) | Yes | No (auction) |
| Financing | Available | Available | Cash only (auction) |