1
Talk to a real estate agent who handles short sales
Short sales are more complicated than regular sales. You need an agent who has done them before and knows how to work with lenders. They'll help you set the right price and handle the paperwork.
Short Sale Your Philadelphia Home
Owe More Than Your Home Is Worth? A Short Sale Might Be Your Best Move
Guide to short selling your home in Philadelphia. Learn how it works, how long it takes, and how it compares to foreclosure on your credit.
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What It Is
A short sale is when you sell your home for less than what you owe on the mortgage, and your lender agrees to accept the lower amount. It's not the same as a regular sale because your lender has to approve the price. It takes longer than a normal sale, but it does less damage to your credit than a foreclosure.
Pros and Cons
Pros
- Less damage to your credit than a foreclosure (by about 100-150 points)
- You avoid having a foreclosure on your record
- The lender may forgive the remaining balance
- You can buy a home again sooner (2 years vs. 7 for foreclosure)
Cons
- The process is slow. It usually takes 3 to 6 months.
- Your lender might not approve the sale price
- You may owe taxes on the forgiven debt (talk to a tax professional)
Best for
Homeowners who owe more than their home is worth, can't afford their payments, and want to avoid a foreclosure on their record.
Typical timeline
3-6 months
from start to finish
How the process works
2
Get your hardship package together
Your lender will want to see proof that you can't afford your mortgage. You'll need a hardship letter, pay stubs, tax returns, and bank statements. Your agent can help you put this together.
3
Find a buyer and submit the offer to your lender
Once you get an offer on your home, your agent sends it to the lender along with your hardship package. The lender's loss mitigation team reviews everything to decide if the sale price is fair. This review takes the most time, often 60 to 120 days.
4
Close the sale with lender approval
If your lender approves the price, the sale moves forward like a normal closing. Make sure you get a written agreement about whether the lender forgives the remaining balance or if you still owe the difference.
Not sure which option is right for you?
Compare all 5 homeowner optionsFrequently Asked Questions
How long does a short sale take in Philadelphia?
Most short sales in the Philadelphia area take 3 to 6 months. The biggest delay is waiting for the lender to review and approve the sale price. Having a complete hardship package and a fair market offer can help speed things up.
How does a short sale compare to foreclosure on my credit?
A short sale typically drops your credit score by about 100 to 150 points. A foreclosure drops it by 200 to 300 points. With a short sale, you may be able to buy another home in 2 to 3 years. With a foreclosure, the wait is usually 5 to 7 years.
Does the bank forgive the difference in a short sale?
Sometimes, but not always. This is called a "deficiency balance." In Pennsylvania, your lender can come after you for the difference unless they agree in writing to waive it. Make sure the short sale approval letter says the remaining balance is forgiven. A lawyer can help you review this.
Can I do a short sale if I'm already in foreclosure?
Yes, in many cases. Pennsylvania law gives you time before a sheriff sale, and you can pursue a short sale during that window. The earlier you start, the better. Contact Philadelphia Legal Assistance at 215-981-3800 for free legal advice on your timeline.
Related situations
These are common situations where homeowners explore this option.
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