What is a short sale?
A short sale is when your lender agrees to let you sell your home for less than you owe on the mortgage — and forgives the difference.
Example: you owe $400,000 but your home is only worth $340,000. In a short sale, you sell for $340,000, the lender takes the $340,000 and writes off the $60,000 shortfall. You walk away with no remaining mortgage debt.
The big picture:
You avoid foreclosure, the lender avoids the cost and time of foreclosing, and the buyer gets your home at fair market value. Everyone wins more than they would in a foreclosure.
Do you qualify?
You generally qualify for an Arizona short sale if you can answer yes to these:
- ✅ You owe more than your home is worth (or close to it)
- ✅ You have a financial hardship — job loss, divorce, medical, etc.
- ✅ You can no longer afford the monthly payments (or won't soon)
- ✅ You can document your hardship with paperwork (bank statements, etc.)
The Arizona short sale timeline
- Day 1 — We talk. Free, confidential 15-minute call.
- Days 2–7 — Listing. I get the home on the market and begin marketing.
- Days 7–45 — Buyer. We accept a qualified offer.
- Days 30–90 — Lender review. I submit the short sale package and negotiate approval.
- Days 90–120 — Close. You sign, the home transfers, and you're done.
What it costs you
In most cases: $0 out of pocket. The lender pays the agent commissions, escrow and title fees, and most of the standard closing costs as part of approving the short sale.
Short sale vs. foreclosure — why it matters
- Credit: A short sale typically drops your score 50–150 points. Foreclosure: 85–160+ points on top of months of late-payment damage.
- Future mortgage: Fannie Mae allows a new mortgage in 4 years after short sale (2 years with documented extenuating circumstances + 10% down). Foreclosure: 7 years.
- FHA: 3-year wait after short sale — or zero if you stayed current throughout.
- VA: 2-year wait after either, but short sale is less scrutinized on underwriting review.
- Privacy: Short sales look like a normal sale on public record. Foreclosures are flagged.
- Control: You stay in control of the process, timing, and negotiation. In foreclosure, the lender and trustee take over.
A critical Arizona nuance — the deficiency waiver
Arizona's anti-deficiency statutes (ARS §33-814 and §33-729) automatically protect qualifying owner-occupied homeowners from deficiency judgments after a foreclosure. But a short sale is a voluntary sale — the statutes don't automatically apply.
That's why every short sale I handle includes a written release of the deficiency in the lender's approval letter. Non-negotiable. If your current agent hasn't gotten that in writing, that's a red flag.
What happens with second mortgages and HELOCs
If you have a second mortgage or HELOC, both lenders must approve the short sale. Arizona has no statutory cram-down for junior lienholders — they can refuse. I negotiate both liens as standard practice, and most second-lien holders accept a small payout rather than nothing if the first lien forecloses.