The Difference Between Short Sale and Foreclosure

US Foreclosures Rise 21 Months in a Row

The Difference Between Short Sale and Foreclosure

The terms “short sale” and “foreclosure” are often associated with distressed real estate transactions, but they represent two distinct processes that homeowners may face when they are unable to meet their mortgage obligations.

Short Sale

A short sale occurs when a homeowner is in financial distress and owes more on their mortgage than the current market value of their property. In this scenario, the homeowner requests permission from their lender to sell the property for less than the outstanding mortgage balance. If approved, the lender agrees to accept the reduced sale price, forgiving the remaining debt. Short sales can be a more favorable option for homeowners compared to foreclosure, as it may have less severe credit implications and allows the homeowner to participate in the sale process.



On the other hand, foreclosure is a legal process initiated by the lender when the homeowner defaults on their mortgage payments. In a foreclosure, the lender takes possession of the property and typically sells it at a public auction to recover the outstanding debt. Foreclosures can have more severe consequences for homeowners, including significant damage to their credit score and the potential loss of their property. The homeowner loses ownership rights during foreclosure, and the process is often more time-consuming and emotionally challenging.


In summary, the key difference between a short sale and foreclosure is how the homeowner’s debt is resolved. In a short sale, the homeowner sells the property for less than the mortgage balance with the lender’s approval, while in a foreclosure, the lender seizes the property and sells it to recover the debt, potentially leading to more severe financial and emotional consequences for the homeowner.

Homeinc can help you no matter what is the case. It is important for homeowners facing financial difficulties to consult specialized professionals and we do count with a team of highly experienced professionals that will help you determine the best course of action for your specific situation.

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We are so excited to have Paula on the Homeinc team. Paula is an attorney by trade but has been working in real estate for the past decade. Her experience spans a variety of channels across the United States. Paula looks forward to sharing her knowledge and experiences with both buyers and sellers alike. Her favorite part of working at Homeinc is the dynamic work environment and the possibility of learning something new every single day. When not at work, Paula enjoys cross fitting, traveling, reading and spending time outdoors with her husband and son.

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