A short sale in the real property (real estate) context—also known as a pre-foreclosure sale—is made when a homeowner sells their home for less than the balance due on the mortgage loan after the lender (bank) agrees to accept the lower amount in full satisfaction of the loan balance (a deficiency waiver).

Although the bank may waive its right to recover the balance or deficiency from you after the proceeds of a short sale are applied to your loan balance, a short sale will usually have a negative impact on your credit score—often as much as a foreclosure.

In Florida, a short sale occurs when a homeowner sells their property for less than the amount owed on the mortgage with the lender's approval. The lender may agree to a deficiency waiver, which means they forfeit the right to pursue the homeowner for the remaining balance of the loan. While this can release the homeowner from the financial obligation, it is important to note that a short sale typically has a detrimental effect on the homeowner's credit score, similar to the impact of a foreclosure. Florida law requires that any agreement to waive the deficiency be in writing. Additionally, homeowners should be aware that there may be tax implications for the forgiven debt, although certain exceptions may apply under federal law, such as the Mortgage Forgiveness Debt Relief Act, if it is in effect. It is advisable for homeowners considering a short sale to consult with an attorney to understand the full legal and financial consequences.