A short sale lets you sell your home for less than the mortgage balance — with the lender's approval — and walk away without a foreclosure on your record. Learn how short sales work, how to negotiate a deficiency waiver, and whether a short sale is right for your situation.
A short sale is a transaction where the lender agrees to accept less than the full mortgage balance as payment in full when the property is sold. The "short" refers to the difference between what's owed and the sale price — not the timeline. Short sales can take 3-6 months to get approved.
| Factor | Short Sale | Foreclosure |
|---|---|---|
| Credit Impact | 100-130 point drop | 100-160 point drop |
| New FHA Loan | 3 years (no late payments during short sale) | 3 years |
| New Conventional Loan | 4 years (2 with extenuating circumstances) | 7 years (3 with extenuating circumstances) |
| Deficiency Risk | Negotiable — demand written waiver | Some states allow; some bar |
| Relocation Assistance | Often $3,000-$10,000 | Rarely available |
| Control of Process | You choose buyer and timeline | No control |
The single most important element of any short sale is a written deficiency waiver from the lender — stating they accept the sale proceeds as full satisfaction of the debt and will not pursue you for the remaining balance. Without this, the lender can still come after you years later. Never close a short sale without a signed deficiency waiver. In some states (like California under CCP § 580e), short sales on certain properties may have statutory deficiency protection — but never rely on this alone.
We help negotiate short sales with full deficiency waivers and relocation assistance. Free consultation.