What Is a Short Sale?
A short sale is a sale of your home for less than the amount you owe on the mortgage, with your lender agreeing to accept the lower amount. It only happens if the lender approves the buyer's offer, so the process is as much about paperwork as it is about finding a buyer.
The short version
Three ideas cover most of what a short sale means.
The home sells for less than the loan
You owe more than the home brings in, so the sale proceeds do not cover the mortgage balance.
The lender has to say yes
Your lender reviews the offer and your finances, then approves, counters, or declines. Nothing is final before that.
It is a negotiated sale, not a giveaway
The home is marketed and negotiated like a regular listing, with the lender's approval as the extra step.
Questions homeowners ask first
What is a short sale?
A short sale is a sale of a home for less than the amount owed on the mortgage, where the lender agrees to accept the lower amount. The lender must approve the sale before it can close.
Who approves a short sale?
The mortgage lender or lenders approve it, usually through a loss mitigation department. If more than one loan is secured by the home, each lender generally has to agree.
Will I owe the difference after a short sale?
It depends on your lender, your loan, and New York law. Sometimes the remaining balance is forgiven, sometimes it is collected, and sometimes it is reported to the IRS. Ask a New York attorney and a tax professional before signing anything.
Does a short sale hurt my credit?
A short sale can affect your credit, though how much depends on your credit history and how the lender reports it. I am not a credit counselor; a nonprofit housing counselor can review your report with you.
Can I stay in my home during a short sale?
Usually you can stay until the sale closes, unless your lender or the sale agreement says otherwise. Get the details in writing from your lender.
Do I have to be late on payments to do a short sale in New York?
Not always. Some lenders will consider a short sale when you are current but owe more than the home is worth, while others require a documented hardship. Your loan servicer's guidelines control.
This page is general information, not legal, tax, or financial advice. Short sales involve your lender, your loan, and your taxes. Please consult a licensed New York attorney and a tax professional about your own situation.
What to read next
How does a short sale work?
The step-by-step version, from paperwork to closing. Read the walkthrough.
Short sale vs. foreclosure
How the two paths differ and what each one involves. Compare them.
How long does it take?
Why there is no standard timeline, and which stage usually runs long. See the timeline.
Have a question about your situation?
Tell me what you are dealing with and I will answer as plainly as I can. No obligation.