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What is the difference between a Short Sale and a Foreclosure.

Are you unsure of the difference between a foreclosure and a short sale? Well, you're not alone as many people do not fully understand the difference between a foreclosure and a short sale.

Because both involve a mortgage lender, the terms "short sale" and "foreclosure" can be confusing. The lender will consider a homeowner in default if they have financial troubles and fail to make their mortgage payments. The lender will begin the foreclosure procedure if the homeowners do not meet their financial mortgage commitments.

It's critical to understand the various actions that a lender can take against a homeowner. Although a Short Sale or Foreclosure allows the homeowner to exit the property, it does not always liberate the homeowner from financial obligations.


A foreclosure is a legal action taken by a mortgage lender to collect payment on a loan. When a homeowner defaults on their mortgage payments, the lender will file for foreclosure to recoup the money owed to them. The lender will make all choices once the property has been foreclosed on because they now possess it. If the property is occupied, the mortgage lender has the option of offering cash in exchange for the keys or starting the eviction process to evict the current occupants.

Short Sale

When a mortgage lender agrees to accept less than what is owed on their mortgage at the time of sale, it is known as a short sale. This usually occurs when a homeowner owes more on their mortgage than the property is worth. The homeowner initiates a Short Sale, which must be approved by the mortgage lender before the sale can proceed. In order to qualify, the homeowners must show that they are in financial trouble. During a Short Transaction, the homeowner retains ownership of the property and has complete control over the sale. In the case of a Short Sale, however, the terms of the sale must be approved by the mortgage lender.

What does this mean to you?

Although both a foreclosure and a short sale will relieve the homeowner of their mortgage responsibilities, a short sale is a more favorable outcome to an owner. The homeowner initiates a short sale, which is considered a voluntary activity. A foreclosure, on the other hand, is a non-evolutionary activity that is initiated by the mortgage lender and involves legal action against the homeowner.

This thing to remember is that if you are falling behind in your mortgage payments you need to be sure to communicate with your mortgage company and learn more about your options. Don't wait call us to go over what a short sale can look like for your property. We work hand in hand with a short sale negotiator to ensure a smooth and efficient process.


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