Short Sale vs. Foreclosure in Florida: What’s the Difference?

In this article, we will discuss the difference between Foreclosure and a Short Sale. Whether you’re a buyer or a seller, the two processes each present different advantages and difficulties.

What Is A Foreclosure In Miami, Florida?

In simple terms:

A foreclosed home is one in which the owner is unable to make his mortgage loan payments, and the bank has repossessed the home”

Redfin Glossary

If you fail to make your monthly mortgage payments, your lender has the right to foreclose on your property. This is a legal process that lets them work towards recovering the money that you owe.

A home is typically foreclosed on when a borrower fails to make consecutive mortgage payments. The lending institution assumes ownership and possession of the property, which results in the eviction of the borrower. The lending agency or bank will then sell these properties at auction.

Alternatively, they may go through a real estate agent and market your property the traditional way. Whatever your situation, foreclosure is stressful for everyone involved, and it can do significant damage to your credit rating, making it very difficult to obtain another mortgage in the future.

Plus, the foreclosure process can vary from state to state. So make sure you expand your knowledge about the foreclosure process over here at the HUD Government website.

What Is A Short Sale?

In a Short Sale, the home is still owned by the borrower. A Short Sale is defined as:

A sale of real estate in which the proceeds from selling the property will fall short of the debts secured by liens against the property. As such, the property owner cannot afford to repay the liens’ full amount and therefore the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.


In some cases, a Short Sale is an option that both the lenders and borrowers agree too. In a Short Sale, the home sells for less than the remainder of the mortgage. The borrower may or may not still owe the unpaid balance – referred to as the deficiency. Sounds complicated, right?

It should also be noted that this option can typically take a while to process, since a few different lending institutions may own the mortgage. All parties with a stake in the property must accept and comply with the terms of the sale. Otherwise, a potential deal could fall through.

A Short Sale can only be accomplished when a Lien Holder is willing to accept less than what is owed on the debt while also agreeing to accept a sales price that is at or below the appraised value for the property…


Short Sale vs Foreclosure: Your Options

While the ramifications of both can have dire consequences, a Short Sale will typically have less of an impact on the borrower’s creditworthiness. Foreclosure can impact a borrower’s credit score by 300 or more points, whereas a Short Sale will only affect the credit score by about 100 points.

Foreclosing on a property often results in the homeowner becoming incapable of getting a traditional mortgage and purchasing another home for 5-7 years. However, with a Short Sale, some circumstances will allow the borrower to buy a new property immediately.

It’s not unusual these days to see homeowners in America struggling to make their monthly mortgage payments. As we all know, many Americans are still fighting to get by in the current economy – An economy that has yet to recover entirely from the Financial Crisis of 2007–08.

Therefore, it shouldn’t be difficult to choose between being foreclosed on or initiating a Short Sale. There are times when lenders are willing to work together with borrowers to organize a Short Sale. By doing this, you can avoid unnecessary fees and save time, since the process of foreclosure can be remarkably time-consuming.

However, we actually have THREE OPTIONS for you to look at in this article. The first two we have already mentioned, (1) initiating a short sale and (2) foreclosure. But, there is a 3rd option: selling your Miami house fast to us at Sunshine State Buyers. We go into more detail below about each option.

  1. Attempt a Short Sale. Or look at other programs with your lender that forgive part of your loan or create a new, more affordable monthly payment scheme so you can start getting back on top of your finances.
  2. Foreclosure. As a last resort, you may have no choice but to let your property fall into foreclosure. You should try to avoid this option at all costs. After all, it is the worst possible scenario. Foreclosing on your property will harm your credit rating, and you could still owe money to the bank even after all the stress, hassle, and effort of complying with all the rules and regulations of foreclosure.
  3. Sell your Florida home to a Real Estate House Buyer. If the bank isn’t willing to work with you or isn’t being very helpful, your best option may be to sell your house FAST. You can work with a local Real Estate House Buying Service like our Company – Sunshine State Buyers – and sell your home fast for an ALL-CASH offer. If you’re interested, we’ll evaluate your situation and get back to you within 24 HOURS with a fair ALL-CASH offer. Just fill out this short form on our website over here >>

In any case, you need to talk with your lender. Try to discuss how you can work together with them on your loan. At Sunshine State Buyers, we can help you with this. Check out our website >>> We Buy Florida Houses Fast!

If you run into issues with your lender or bank, get in touch. We can give you advice and point you in the right direction. Reach out to us on our Contact page, and we can discuss your situation.

By being aware of all your options, you might be able to avoid significantly damaging your credit score, and create a situation where you can still purchase a new home for your family when your finances improve.

Having “foreclosure” recorded on your credit report will make buying a new home genuinely impossible for 5-7 years. So if the opportunity arises, consider getting in touch with your lender and proceeding with a Short Sale.

Have a pending foreclosure? Does a Short Sale sound too complicated?
We would love to make you a fair ALL-CASH offer on your house.
Give us a call anytime at (305) 916-3328 or fill out this short form on our website today!

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David Veras

David Veras was born in Hialeah, Florida and has been involved in Real Estate since February 2019.

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