What Is a Short Sale, and How Does It Differ from a Foreclosure
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
1. A Short Sale Happens When the Seller Owes More Than the Home Is Worth
In a short sale, the homeowner is trying to avoid foreclosure by selling the home for less than what they owe on their mortgage.
The lender must approve the sale (since they’re taking a loss)
It can take weeks—or even months—for approval
There’s usually room for negotiation, but it’s not always quick or easy
Short sales are about avoiding default—and buyers need to be patient.
2. A Foreclosure Happens When the Bank Takes the Property Back
A foreclosure occurs after the homeowner has defaulted on their loan and the lender repossesses the property.
The bank becomes the seller
Homes are often sold as-is and fast—sometimes at auction
There may be deferred maintenance, hidden issues, or title problems
Foreclosures are generally more final and less negotiable, but may be quicker to close.
3. Both Can Offer Deals—But Require Strategy and Expert Guidance
If you’re looking for a bargain, short sales and foreclosures can be appealing—but they’re not always the easiest path.
Short sale: More paperwork, slower process, less credit damage for seller Foreclosure: Faster, usually more damage to seller’s credit, less flexibility
Either way: Always get a home inspection and title review
These deals can work well for buyers who have patience, flexibility, and a great team in their corner.
Thinking About Buying a Short Sale or Foreclosure? Let’s Talk First
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