Short Sale
A short sale is selling a property for less than the amount owed on the mortgage, with the lender agreeing in advance to accept the shortfall instead of pursuing the full balance — an alternative to letting the loan go to foreclosure.
The seller submits a hardship package and purchase offer to the lender for approval; the lender orders its own valuation and decides whether to accept, counter, or reject — a review process that commonly takes 30 to 90-plus days even after a buyer is already in place.
California's anti-deficiency protections under Code of Civil Procedure Section 580e generally bar a lender from pursuing the seller for the remaining balance after an approved short sale on a 1-4 unit residential property, a meaningful protection compared to some other states.
Because lender approval is slow and uncertain, a short sale often loses the race against a scheduled trustee's sale date. Homeowners considering one should compare the realistic timeline against a direct cash sale and get guidance from a real estate attorney or HUD-approved counselor on the tax and credit consequences before proceeding.
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