A short sale, explained in plain language.
When a home is worth less than what is owed on it, a short sale lets you sell with the lender’s approval and avoid a completed foreclosure. Here is how it works, how it interacts with bankruptcy, and what to expect at each stage.
First conversation
Pressure to list
Your attorney
What is a short sale?
A short sale happens when a home sells for less than the amount owed on the mortgage and the lender agrees to accept the sale proceeds. The lender must approve the sale. For many homeowners, a short sale is an alternative to foreclosure that allows a more orderly move and more control over timing.
Depending on your loan and your lender’s terms, a short sale may or may not fully release the remaining balance. In Arizona, some purchase money loans on smaller residential properties are protected by anti-deficiency statutes, but whether that applies to you is a legal question for your attorney.
How a sale can interact with Chapter 7 or Chapter 13.
Chapter 7
A trustee is appointed to administer the estate. If the home has equity, the trustee may sell it, and we may be retained by the trustee. If there is little equity, the trustee may abandon the property, and a short sale or other sale may become possible with your lender.
Chapter 13
You keep your property under a repayment plan. Selling the home during the plan generally requires permission from the court or the trustee. Your bankruptcy attorney handles that request, and we handle the real estate side.
Our role, stated clearly.
UrbanCiti Realty is a real estate brokerage. We are not a law firm and we do not give legal, tax, or credit advice. When we list your home, we represent you as the seller in the real estate transaction. If your property is part of a bankruptcy estate, the trustee may be our client instead, and we will tell you so in writing before any work begins.
If you have a bankruptcy attorney, we work alongside them and follow their direction on anything that touches your case. If you do not have one, we can share a list of independent attorneys. We do not receive referral fees from attorneys.
A short sale, step by step.
| Stage | What happens | Typical time |
|---|---|---|
| Consultation | We review your situation and options with no obligation | 1 meeting |
| Documents | Hardship letter, income and bank documents, lender authorization | 1 to 2 weeks |
| Listing | Home listed with short sale disclosure, buyer offer accepted | 2 to 8 weeks |
| Lender review | Lender orders its own valuation and reviews the file | 30 to 120 days |
| Approval & close | Approval letter issued, escrow closes | 2 to 4 weeks |
Timelines depend on your lender and are not guaranteed. A short sale generally affects credit, often less severely than a completed foreclosure, but the impact varies by person. Ask a housing counselor or your attorney about your situation.
Disclaimers
UrbanCiti Realty & Property Management is a licensed Arizona real estate brokerage. We are not a debt relief agency, debt service provider, or mortgage loan modification service. We do not provide legal or tax advice, and nothing on this page should be interpreted as such. While our licensed agents assist clients with the transactional mechanics of marketing and negotiating real estate short sales to facilitate a property transfer, we are not attorneys. Consult a licensed attorney or a certified public accountant regarding bankruptcy, foreclosure, tax liabilities, or deficiency questions.
HUD-approved housing counseling is available at no cost. Find a counselor through the U.S. Department of Housing and Urban Development at hud.gov/findacounselor.
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