What Is a Short Sale?
A short sale occurs when a homeowner sells their property for less than the total amount owed on the mortgage, with the lender’s approval. The lender agrees to accept the sale proceeds as full or partial satisfaction of the debt. A short sale is a voluntary, controlled alternative to foreclosure that gives you far more control over your outcome — and your future.
Short Sale vs. Foreclosure — Key Differences
- Credit impact: Both stay on your credit for 7 years, but a short sale’s impact is significantly less severe than a foreclosure
- New mortgage eligibility: You may qualify for a new mortgage in as little as 2–4 years after a short sale vs. 5–7 years after a foreclosure
- Deficiency judgment: A short sale allows attorney-negotiated deficiency waiver — foreclosure often leaves you liable for the remaining balance
- Control: In a short sale, you choose your buyer and negotiate your timeline — in foreclosure, you have no control
- Privacy: A short sale is a private transaction — a foreclosure is a public court proceeding
The Attorney-Negotiated Deficiency Waiver
The most critical protection in any short sale is a written deficiency waiver — a legally binding agreement from your lender stating they will not pursue you for the remaining loan balance after the sale. Without this language in writing, you could sell your home and still owe tens of thousands of dollars to the bank.
Attorney Thompson negotiates this waiver as part of every short sale transaction and reviews all lender approval letters and closing documents before you sign anything. Never sign a short sale agreement without an attorney reviewing it first.
The Short Sale Process with Attorney Thompson
- Free consultation to determine if a short sale is your best option
- Lender authorization and short sale approval application
- Coordination with your real estate agent to list and market the property
- Submission of purchase offer to lender for approval
- Negotiation of deficiency waiver and approval letter terms
- Legal review of all closing documents before you sign
- Coordination with CPA regarding tax implications of cancelled debt
Tax Implications of a Short Sale in Florida
Cancelled mortgage debt may be considered taxable income by the IRS under certain circumstances. The Mortgage Forgiveness Debt Relief Act and related provisions may provide important exemptions, particularly for primary residences. Every homeowner’s tax situation is different — we strongly recommend consulting a CPA alongside your legal representation. Our office can refer you to qualified tax professionals in the Lake Mary area.