Foreclosure and short sale are two different ways that a homeowner can deal with a mortgage that they can no longer afford to pay. Both options can have a negative impact on a person’s credit score, but they differ in how they are handled and the consequences that they have.
5 Key Ways Foreclosure Works in Real Estate
Foreclosure is a legal process that occurs when a homeowner is unable to make their mortgage payments, and the lender takes possession of the property. This process can take several months, or even years, to complete, and it can have a serious impact on a person’s credit score.
The specific process can vary depending on the state where the property is located, but generally, the process works as follows:
1. Default
The homeowner falls behind on their mortgage payments and enters into default. This triggers the foreclosure process.
2. Notice of Default
The lender sends the homeowner a notice of default, which informs the homeowner that they are in default and that the foreclosure process has begun.
This notice also typically provides the homeowner with a certain period of time to cure the default, usually around 30-90 days, by making up the missed payments and paying any late fees.
3. Notice of Sale
If the homeowner is unable to cure the default, the lender will typically send a notice of sale, which informs the homeowner that the property will be sold at a public auction. This notice will also inform the homeowner of the date, time, and location of the sale.
4. Public Auction
The property will be sold at a public auction, usually held at the county courthouse. The property is sold to the highest bidder, and the proceeds from the sale are used to pay off the outstanding mortgage balance.
5. Eviction
If the homeowner is still living in the property, the lender will typically initiate eviction proceedings after the sale. The homeowner will be given a certain period of time to vacate the property, usually around 30-60 days.
Deficiency Judgment
In some states, if the proceeds from the sale of the property are not enough to pay off the outstanding mortgage balance, the lender may seek a deficiency judgment against the homeowner, which means that the homeowner will be held liable for the remaining balance.
It’s important to note that the foreclosure process can take several months or even years to complete, and it can have a serious impact on a person’s credit score. Foreclosures stay on a credit report for seven years and can make it difficult to obtain credit or a mortgage in the future.

The 5 Benefits of Short Sale
A short sale, on the other hand, occurs when a homeowner is unable to make their mortgage payments, and the lender agrees to accept less than the full amount of the mortgage as payment for the property. This process can be quicker than a foreclosure, and it can have less of an impact on a person’s credit score. A short sale will stay on a credit report for seven years, but it is generally considered less damaging than a foreclosure.
While a short sale may be a less damaging option than a foreclosure, it is not always an easy process. The homeowner must first find a buyer who is willing to purchase the property for less than the outstanding mortgage balance, and then the lender must agree to accept that amount as payment. Additionally, the homeowner may still be responsible for paying any deficiency balance (the difference between the sale price and the outstanding mortgage balance) after the sale.
1. Avoiding Foreclosure
A short sale allows a homeowner to avoid the lengthy and damaging foreclosure process. This can help to preserve a person’s credit score and make it easier to obtain credit or a mortgage in the future.
2. Reducing Financial Burden
A short sale can help a homeowner to get out from under a mortgage that they can no longer afford to pay. This can provide financial relief and help the homeowner to move on with their life.
3. Faster Process
In some cases, a short sale can be completed more quickly than a foreclosure, which can provide a sense of closure for the homeowner.
4. Impact on Credit Score
A short sale can have less of an impact on a person’s credit score compared to a foreclosure.
5. Opportunity to negotiate
A short sale gives homeowners an opportunity to negotiate with their lender, which may be beneficial for both parties.
It’s important to note that short sale may not be the best option for every homeowner and it is important to consult with a financial advisor, attorney, and a real estate professional to understand the pros and cons before making a decision.

6 Ways Florida Property Is Unique
The foreclosure and short sale process can vary depending on the state in which the property is located. Some states have a judicial foreclosure process, in which the lender must go through the court system to foreclose on a property, and other states, like Florida, have a non-judicial foreclosure process.
In addition, some states have laws that provide additional protections for homeowners, such as the right to a foreclosure mediation or the requirement for the lender to provide notice to the homeowner before foreclosing.
Similarly, the short sale process can also vary depending on the state. Some states have laws that prohibit deficiency judgments (the lender’s ability to seek a deficiency balance after the short sale) and this may change the process.
It’s also important to note that some states have laws that provide additional protections for homeowners, such as the right to a foreclosure mediation or the requirement for the lender to provide notice to the homeowner before foreclosing. It’s always a good idea to consult with an attorney and/or a housing counselor familiar with the laws in your state.
1. Non-judicial Foreclosure Process
Florida is one of a few states that have a non-judicial foreclosure process, which means that a lender does not have to go through the court system to foreclose on a property. This can make the foreclosure process quicker in Florida compared to states that have a judicial foreclosure process.
2. Right of Redemption
Florida law allows a borrower to redeem their property until the day before a foreclosure sale. It’s a right that allows the borrower to pay the outstanding amount of the mortgage, plus interest and costs, and keep the property.
3. Statute of Limitations
Florida has a five-year statute of limitations on foreclosures, which means that a lender has five years to initiate a foreclosure after the borrower’s first missed payment.
4. Notice of Default
In Florida, the lender must provide the borrower with a notice of default at least 45 days before the sale.
5. Acceleration Clause
In Florida, a lender can accelerate the entire mortgage debt and start the foreclosure process, even if the borrower is only in default on a portion of the mortgage.
6. No Deficiency Judgments
Florida law generally prohibits deficiency judgments, which means that a lender cannot seek a deficiency balance (the difference between the sale price and the outstanding mortgage balance) after the sale, this means that the homeowner will not be held liable for any remaining debt after the foreclosure sale.
It’s important to note that laws and regulations are subject to change. It’s always a good idea to consult with an attorney familiar with the laws in Florida before making any decisions related to foreclosure.

Short Sales and Foreclosure Resource
In summary, both foreclosure and short sale are options for homeowners who can no longer afford their mortgage payments but they have different processes and consequences. Foreclosure is a lengthy process that can have a severe impact on a person’s credit score. A short sale is a quicker process that can have less of an impact on credit score. It is important for homeowners to understand the differences and work with a financial advisor and real estate agent before making a decision on which option to pursue.
A SFR (Short Sales and Foreclosure Resource) certified Realtor is a real estate professional who has completed a specific training program and passed an exam to become certified in the area of short sales and foreclosures. This certification is offered by the National Association of Realtors (NAR).
SFR certified Realtors have knowledge and experience in the short sale and foreclosure process, which includes understanding the legal and financial aspects of these transactions, as well as the nuances of working with distressed properties and homeowners. They also have the skills to negotiate with lenders and navigate the often-complex process of short sales and foreclosures.
Having a SFR certified Realtor can be beneficial for both buyers and sellers who are looking to purchase or sell a short sale or foreclosure property. They can provide valuable guidance, expert advice, and assistance throughout the process, helping to ensure that the transaction goes as smoothly as possible.
It’s important to note that while having an SFR certified Realtor can be beneficial, it’s also important to make sure that the agent you are working with has experience and a good track record in the area of short sales and foreclosures, as this can be a highly specialized field and not all agents may have the same level of expertise.
Our experienced agents at aDoor Real Estate are here to help, and they have the certifications to help you navigate the foreclosure and short sale process. When you need an expert, contact us, we can help. Reach out to us today!