Short answer
It depends on your loan balance and the house's value. A short sale means the lender agrees to accept less than you owe, so it needs lender approval. A cash sale to an investor can pay the loan off in full if the price covers it. Ask the lender for a payoff first.
What each one means
A short sale is a sale in which the price is less than the mortgage balance, and the lender has to agree to it. A cash sale is a sale to a buyer paying without a mortgage loan. PALawHELP's advice for homeowners facing foreclosure is to ask the lender for permission to sell the house, which is the starting point for either route.
When a cash sale works
If the offer covers the payoff, plus any fees the lender has added, a cash sale can pay the loan off and avoid the sheriff sale. Whatever is left after the payoff, taxes, liens and closing costs belongs to you. Cash buyers usually do not need a lender's approval of their loan, which can save time. Always get a written payoff from the servicer first.
When a short sale is on the table
If the house is worth less than you owe, the lender has to agree to take less. That takes paperwork and time, and each lender has its own process. Ask whether the lender has a short sale department and what documents it requires. A housing counselor can help. Also ask whether any balance is left after the sale. The answer depends on the loan and on the state, and a lawyer should confirm it. Short sales have their own clock. The lender reviews your finances and the buyer's offer, and it may take longer than your foreclosure calendar allows. Ask the servicer in writing whether the sheriff sale will be postponed during review, and do not assume it will. If the date holds, a sale that does not need the lender's approval of a discount may be the only one that can close in time. This is where an attorney or housing counselor earns their keep.
Questions to ask the lender
Ask the servicer for a written payoff good through a specific date. Ask whether it will approve a sale for less than the payoff, and what documents it requires. Ask how long a short sale review takes, and whether the foreclosure sale date will be postponed during review. Ask whether the lender will release you from any balance left after the sale, and ask for that in writing. Ask what happens to your credit and whether any tax form will follow. Then check with a tax professional, because forgiven debt can have tax effects. Keep all of this in writing, and have an attorney read any agreement before you sign.
Alternatives to compare
PALawHELP also mentions a deed in lieu of foreclosure, where you sign the deed over to the bank. You can compare three paths: a cash sale, a short sale and a deed in lieu. Kaizen Home Buyers can make a cash offer within 24 hours on a house as-is, with no repairs and no agent commission, and can close in 14 to 30 days or on your date. Call 267-329-0084. Listing with an agent is another path if the timeline allows.