Short Sale: What Should You Do?

by Jenni McCarty

Life doesn’t always go according to plan—especially when it comes to real estate and finances. If you’re a homeowner facing financial hardship, you may have heard of the term short sale or pre-foreclosure. But what does it really mean, and more importantly, what should you do?

Let’s break it down.

💡 What Is a Short Sale?

A short sale occurs when a homeowner sells their home for less than the remaining balance on their mortgage. The lender agrees to accept the lower sale price rather than going through a costly and lengthy foreclosure process.

It’s called a “short” sale because the sale price falls short of the amount owed on the loan.

Example:

If you owe $250,000 on your mortgage but your home sells for $200,000, your lender may agree to accept the $200,000 and forgive the remaining $50,000—though terms can vary.

✅ Pros of a Short Sale

Avoid Foreclosure: A short sale is often less damaging to your credit than foreclosure.
Control the Sale: You get to stay involved in the process rather than having the bank take over.
Move On Faster: Once completed, you may be able to buy another home sooner than after a foreclosure.
Potential Debt Forgiveness: In some cases, lenders may waive the deficiency balance.

⚠️ Cons of a Short Sale

Requires Lender Approval: The process can be slow and uncertain, as the lender must agree to the sale.
Credit Impact: While less damaging than foreclosure, it still impacts your credit score.
No Profit: You walk away with no equity or profit from the sale.
Tax Implications: Forgiven debt may be considered taxable income in some cases—consult a tax advisor.

🧭 What Are Your Best Options?

Before deciding to pursue a short sale, it’s crucial to weigh all your options:

Loan Modification: Talk to your lender about restructuring your loan terms.
Forbearance or Repayment Plans: These can help you catch up without selling.
Renting Your Home: Generate income to cover mortgage payments temporarily.
Refinancing (if eligible): Depending on your credit, refinancing may be an option.
Short Sale: If other solutions don’t work, this could be your best route to avoid foreclosure.

📘 Need Guidance?

Navigating a short sale isn’t easy, but you don’t have to do it alone. Whether you're considering your options or ready to take action, this FREE Guide will walk you through the entire process:

🎯 Download the FREE Short Sale Guide here

Remember, you have options—and the sooner you take action, the more choices you'll have. A short sale may be the right move, but make sure you’re informed every step of the way.