What is the difference between a short sale and a foreclosure?

A short sale and a foreclosure are two different types of real estate litigation law in Washington. A short sale occurs when a lender agrees to let a homeowner sell the property below-market value and the lender agrees to forgive some or all of the remaining loan debt. The lender then absorbs the loss when the property is sold and the proceeds of the sale are applied to the loan balance. A foreclosure, however, occurs when the lender repossesses the property after a homeowner has defaulted on the loan. Foreclosure is used as a means of recovering money that the lender is due for the missed loan payments. The lender then has the right to evict the homeowner from the property and put it up for sale. Both short sales and foreclosures can cause serious financial damage to homeowners. However, a short sale can be beneficial to the homeowner because it allows them to sell the property and avoid being evicted, while keeping their credit score intact. On the other hand, a foreclosure can damage the homeowner’s credit score and leave them unable to purchase another home in the near future. It is important to note that short sales are becoming increasingly popular and are often the least damaging form of real estate litigation.

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What is the difference between a short sale and a foreclosure?

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