A short sale is a sale of your home for less than the amount needed to pay off the mortgage, with the mortgage servicer or other required creditors agreeing to the transaction. Listing the home or receiving an offer does not mean the lender has approved the sale, and it does not automatically erase your responsibility for any unpaid balance. Start with the servicer’s loss-mitigation department, find out which program and approvals apply, and get any lien release and deficiency waiver in writing before closing.
What is a short sale, and when might it be considered?
The Consumer Financial Protection Bureau (CFPB) describes a short sale as a type of loss mitigation in which a home is sold for less than the borrower owes on the mortgage. It is an alternative to foreclosure, but the homeowner must leave the property after the sale. A short sale is not the only possible way to address mortgage hardship: a home-retention option or, in some circumstances, a deed-in-lieu of foreclosure may also be available.
Whether a short sale is possible depends on more than the home’s estimated value. The loan program, investor or insurer, mortgage status, other liens, foreclosure schedule, and applicable state law can affect eligibility, required approvals, timing, and whether a borrower remains liable for a balance. This is a general U.S. process guide, not a determination of eligibility or legal or tax advice for a particular borrower.
How do you start a short sale?
1. Contact the servicer early
Call the mortgage servicer and ask for its loss-mitigation department. Say you are considering a short sale, and ask about other loss-mitigation options as well. Tell the representative if you have received a foreclosure notice or know of a scheduled foreclosure sale.
#1 Best Overall
Ask the servicer to identify the loan’s investor or insurer, explain which short-sale program or process applies, and provide its current written requirements for the borrower response package. Also ask whether subordinate lienholders or other parties must approve the transaction. Keep a record of calls, names, dates, reference numbers, and documents sent.
2. Get the current checklist and submit a complete package
There is no single document list that applies to every short sale. Requirements can vary by servicer, investor, loan status, and borrower circumstances. Request the servicer’s current checklist in writing, submit the items it requests, and respond promptly if it identifies missing or outdated information.
For certain Fannie Mae processes, the servicing guide refers to a complete Borrower Response Package where one is required. If an initial offer is submitted with incomplete information, Fannie Mae’s guide requires a checklist. That is an investor-specific rule, not a universal borrower checklist.
3. Confirm eligibility and the approval path
Ask the servicer to confirm whether you may be considered under the applicable program and whose approval is required. Fannie Mae and Freddie Mac have separate servicing rules. The Federal Housing Administration (FHA) has a Pre-Foreclosure Sale program; FHA says an eligible borrower whose home’s current market value is insufficient to pay off the loan may be able to sell through that program, also called a short sale.
Quick wins for a faster PC:
Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Do not assume that approval from the mortgage servicer also resolves a second mortgage, home-equity loan, judgment lien, mortgage-insurance requirement, or other claim against the property. Ask which parties must consent and which debts or liens each approval or release will cover.
What happens after the home is listed?
4. List the property and obtain a bona fide offer
Consider working with a real estate professional licensed where the property is located and experienced with short sales. The servicer or investor may set requirements for listing, marketing, the contract, and how offers are submitted. Fannie Mae’s servicing guidance, for example, directs servicers to communicate listing requirements to the agent, review sales contracts, and register offers through its applicable process.
An offer is not final short-sale approval. Before signing or relying on a contract, ask how the servicer wants the offer submitted and whether its requirements affect the contract terms or closing date. Make sure the buyer understands that required approvals may take time and that an accepted offer alone does not authorize the lender to accept less than the amount owed.
5. Wait for the servicer’s review of price and terms
The servicer may order a valuation and review the proposed price, contract terms, and permitted costs under the applicable program. A low offer, incomplete borrower package, title problem, or a required decision from another lienholder can delay or prevent the sale. A broker price opinion or appraisal is not the same as final lender approval.
The Tool Desk
Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Keep responding to requests and send revised documents or offers through the channel the servicer specifies. If the offer changes, ask whether the revised terms need a new review and whether other lienholders must also approve them.
What must be in writing before you close?
6. Verify the approval, lien releases, and deficiency terms
Before treating the sale as approved, read the written approval for its conditions, deadlines, permitted costs, required payments to other lienholders, and any relocation assistance. Confirm which creditor is releasing which lien. A lien release and a waiver of personal liability are different: release of a lien clears a claim against the property, while a deficiency waiver addresses whether a creditor may pursue the borrower personally for a remaining balance.
The CFPB warns that some states allow a creditor to sue for a deficiency after a short sale. Ask each relevant creditor to state in writing whether it is waiving the deficiency and exactly which debt the waiver covers. Do not infer a waiver from a lender’s consent to the sale. Fannie Mae requires a deficiency waiver at closing for specified loans after successful completion of its process; that requirement does not promise a waiver for every mortgage, lien, or short sale.
7. Review the closing statement and meet every approval condition
Compare the settlement statement with the written approvals before signing. Check that the sale proceeds, transaction costs, payments to subordinate lienholders, and any relocation assistance match the approved terms. Confirm that the required lien releases and deficiency documents will be delivered, and retain copies of the approval letters, settlement statement, releases, and waivers with your loan records.
How long can the process take?
There is no verified market-wide average duration for a short sale in the sources cited here. The official deadlines below apply in particular contexts; they are not a promise that every short sale will be decided or completed by those dates.
| Timing | What it means | Scope |
|---|---|---|
| At least 120 days after delinquency | The CFPB says, with rare exceptions, a servicer cannot start foreclosure until at least this long after delinquency. | General federal guidance described by the CFPB in 2024; it does not describe every exception or state foreclosure schedule. |
| More than 37 days before a scheduled foreclosure sale | The CFPB says a complete application received more than this period before the sale generally must receive a written response within 30 days. | CFPB guidance from 2024. The timing protection is not a guarantee for a late or incomplete file or where other program rules apply. |
| Five business days | Acknowledge an initial short-sale offer. | Fannie Mae servicing process, 2025. |
| 30 calendar days | Provide a written response to the initial offer after receiving the initial offer and a complete Borrower Response Package, if required. | Fannie Mae servicing process, 2025. |
| Ten business days | Decide on a revised short-sale offer. | Fannie Mae servicing process, 2025. |
| 60 calendar days | Close after offer approval unless Fannie Mae approves an extension. | Fannie Mae servicing process, 2025. |
These deadlines come from different rules and do not combine into a guaranteed end-to-end schedule. If foreclosure is underway, tell the servicer the sale date and ask what deadlines and protections apply to your file. The CFPB’s guidance about a complete application received more than 37 days before a sale should not be treated as a substitute for confirming your case’s status and requirements.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How does a short sale compare with other loss-mitigation options?
The right path depends on whether keeping the home is possible, what the servicer will consider, how soon a foreclosure sale may occur, and the legal and financial consequences of each option. Ask the servicer to explain the available alternatives and compare them against your circumstances.
| Option | Can you keep the home? | What to confirm |
|---|---|---|
| Short sale | No. The property is sold and the homeowner leaves after the sale. | Program eligibility, required approvals, sale and closing conditions, lien releases, deficiency liability, and possible tax consequences. |
| Home-retention option | Potentially; the option is intended to address the loan while retaining the home. | Which options the servicer offers, their eligibility and documentation requirements, and whether they fit the foreclosure timeline. |
| Deed-in-lieu of foreclosure | No. The borrower transfers the property rather than selling it to a buyer. | Whether the servicer will accept it, which liens or claims must be addressed, and the treatment of any remaining debt. |
These categories do not establish which option is best or available to a particular borrower. Ask about deadlines, deficiency treatment, transaction or relocation costs, and possible tax effects for each option you are considering.
Best Value
- Complete Open House Kit: Everything you need for a successful showing — this set includes 2 Open House Sign-In Books and 2 Realtor Tent Cards. A must-have package for real estate agents to create a professional and organized open house experience.
- Ideal Sizes for Professional Display: The tent cards measure 5.5 x 8 inches, making them highly visible to guests, while the sign-in books are full letter size (8.5 x 11 inches) — perfect for collecting visitor information clearly and efficiently during property showings.
- Durable and Premium Materials: Crafted with high-quality, thick paper, each book ensures a smooth writing surface and long-lasting use. Built to handle frequent open house events, these materials reflect professionalism and attention to detail.
- Inviting & Thoughtful Design: Each piece is designed to make guests feel welcome. The tent cards include friendly messages like “Open House Visitor Registration” and “See Yourself Living Here”, helping create a warm, engaging environment that encourages meaningful connections.
- Organized Visitor Tracking & Lead Collection: Easily record names, emails, and phone numbers of all attendees — perfect for following up with potential buyers. An essential real estate supply to help agents build client relationships and maintain accurate records after every showing.
What tax issues should you check after the sale?
Sale treatment and forgiven-debt treatment are separate
A short sale can raise tax questions about both the sale of the property and debt that is canceled. The IRS’s Publication 4681 (2025) explains exceptions and exclusions and includes a short-sale example. Whether a canceled amount is taxable depends on the borrower’s facts and the tax year; the presence or absence of Form 1099-C by itself does not determine taxability.
Pay attention to the 2025–2026 transition
Publication 4681 (2025) says the qualified-principal-residence-indebtedness exclusion is available for qualifying discharges before January 1, 2026, but not for discharges after 2025. Because discharge timing and tax year matter, ask a qualified tax professional how the rules apply to your situation rather than assuming the sale date and debt-discharge date are the same.
When should you get legal or housing-counseling help?
State law, lien structure, loan type, and foreclosure status can change the answer to questions about deficiency liability, approval requirements, and deadlines. Consider speaking with a local attorney if you need advice about a deficiency, lien, contract, foreclosure deadline, or the scope of a creditor’s written release. A HUD-approved housing counselor can also help you understand mortgage options and prepare to talk with your servicer. A tax professional can assess possible cancellation-of-debt and sale-related consequences.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
