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Real property

short sale

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 Washington State, 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 provide relief from the debt 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. Washington State's nonjudicial foreclosure process often influences the willingness of lenders to consider short sales as an alternative to foreclosure. Homeowners considering a short sale should consult with an attorney to understand the specific legal and tax implications, as well as to negotiate the terms of the deficiency waiver with the lender.

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Real property

short sale

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Washington State Code

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Real property

short sale

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