Pros and Cons of Short Sales

New Jersey foreclosure attorney

It’s a jarring, but true statistic that millions of Americans have trouble paying their mortgage. Sometimes it’s because a family will simply live paycheck-to-paycheck, other times it’s because unforeseen situations could even have them facing foreclosure. Owners in this situation may also consider a short sale.

A short sale is the process of selling a home for less than the amount owed to the creditor, usually when the value of the home has dropped. In this way, a homeowner can seek approval from the creditor to sell the house at a lower value and in most cases the mortgage would be considered paid in full.

In general, it’s easier than executing a foreclosure for the bank and there’s more control in how the short sale would affect your finances. Let’s take a look at some of the pros and cons of a short sale:


Alternative to Foreclosure

The most obvious benefit to a short sale is a avoiding a foreclosure. By opting for a short sale, you take some control of the situation and you’re able to dictate, to an extent, how much the situation can affect your credit and you can hold down time long enough to get the situation sorted. No big rush like in a foreclosure.

Selling is Often Easy

While the same criteria applies to selling a short sale (location, value, state of the home), the price of these sales are often lower than surrounding competition making it an ideal but for single families, bargain hunters, investors, and even first time owners.

You Credit Can Take Less of a Hit

Not to say that your credit will escape a short sale unscathed, but in contrast to a foreclosure, which can last up to seven years on your credit report, short sales tend to drop off in a shorter amount of time.


It’s Not an Overnight Process

While short sales offer many benefits for buyers seeking a bargain, there’s still a lot of misunderstandings regarding what a short sale is. Uninformed buyers may consider a short sale to be somehow defective and may skip a home viewing. Investors may try to offer much lower than what you’re trying to sell for – these can greatly draw out the short sale process.

Your Credit May Still Be Affected

While it may not be as bad as a foreclosure, your credit may be affected by a short sale. This is because a short sale can usually be considered an unpaid debt in the grand scheme of things. This can affect your credit from 2-4 years, leaving a substantial gap to rebuild your credit.

You Don’t Call All the Shots

Short sales may give you more control over a foreclosure, but that certainly doesn’t mean you have all the control. Many deciding facets of the sale are still largely out of your control – the bank or loaner have to approve your sale before it can be taken care of. They can even decide what a house can be listed for.

Seller Responsibility

Another con of a short sale is that the seller can be responsible to declare and pay Cancelled Debt Income to the Internal Revenue Service.

Despite some cons, a short sale may be your best option. If your debt is getting out of control and you are having a difficult time keeping up with the mortgage payments, you need to contact an experienced real estate lawyer and discuss your options!


Attorney Spivack knows that selling your home is critical to allowing your family to move on to the next milestone in life. Whether you are forced to sell in a short sale or are excited about selling and buying something new, you can rely on Mr. Spivack’s more than 30 years of real estate law experience to protect you every step of your sales transaction. Contact Attorney Joel Spivack today for a free consultation about your house sale. There’s no obligation and he will answer all your questions – you’ll quickly understand why countless others have chosen our law firm to handle their closings in South Jersey.

We are here to help you.

Is this a New Jersey matter or Philadelphia Region matter?
We are licensed to practice in New Jersey and Pennsylvania.

Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
Skip to content