What Is a Short Sale and How Does It Differ from a Foreclosure?
- By Jim Blackburn
- on
- Buy A House, FHA 203k loans, Financial Planning, Foreclosure, Short Sale
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.
If you’re considering a short sale purchase, understand what your financing will look like. Calculate your Conventional Purchase Loan Payment now to budget for the home while accounting for the extended timeline and potential repairs.
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.
Foreclosures often need significant repairs. Calculate your FHA 203K Renovation Purchase Loan Payment now to see how you can finance both the purchase and necessary renovations in one loan—perfect for distressed properties.
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.
Ready to explore distressed property opportunities? Visit our Buy a House page to understand all your financing options and get connected with professionals who specialize in short sales and foreclosures.
If you’re considering a fixer-upper foreclosure, explore conventional renovation financing too. Calculate your Conventional Renovation Homestyle Purchase Loan Payment now to see how Fannie Mae’s HomeStyle loan can help you buy and renovate in one transaction.
Thinking About Buying a Short Sale or Foreclosure? Let’s Talk First
At Stairway Mortgage, we help you buy smart—because great deals should come with great advice.
📘 Download our homebuyer guides about distressed property purchases.
📊 Check Current Rates for purchase and renovation loans.
🧮 Explore renovation financing with our FHA 203K Calculator.
🏠 Learn more on our Buy a House page.
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