How a Florida Short Sale Works… and Why It Beats Foreclosure
If you're behind on your mortgage in Northeast Florida, you've probably heard "short sale" and "foreclosure" tossed around like they mean the same thing. They don't, and the difference can change your credit, your timeline, and how soon you can buy again. I'm Jim Armstrong, a REALTOR® with Momentum Realty and an SFR-certified short sale specialist. Here's the plain-English version of how a short sale actually works. No jargon, no scare tactics.
What a short sale actually is
A short sale means selling your home for less than you owe, with your lender's approval. The lender agrees to accept the sale price as payoff even though it doesn't cover the full balance. It is not a foreclosure, and it is not giving up. For a lot of homeowners who are underwater, meaning you owe more than the house is worth, and who are behind or about to be, a short sale is the move that does the least damage.
Short sale vs. foreclosure: why the difference matters
People use these two words like they're interchangeable. They're not. A foreclosure is the bank taking your home through the courts. A short sale is you selling it on your own terms before that happens. The difference shows up in the two places that matter most: your credit and your future. A short sale generally hits your credit less hard than a foreclosure, and it usually puts you in a position to buy again sooner. You stay in the driver's seat instead of having it done to you.
How a short sale works in Florida
Here's the honest version, no jargon:
We talk. You tell me your situation, the loan, the hardship. No pressure, no commitment.
We document the hardship. Lenders need a reason: job loss, medical, divorce, an income drop, that kind of thing.
We list and market the home like any other sale and bring you an offer.
The lender reviews and approves the sale. This is the part that takes patience, and it's where I do most of the work, staying on the lender's timeline so you don't have to.
We close, and you move forward.
I work with a dedicated short-sale processing partner on the lender negotiation, so the file is handled by people who do this every single day.
What it costs you
In most short sales, the lender pays the agent commissions and most of the closing costs out of the sale, not you. Every file is different and nothing here is a promise, but as a rule, a homeowner doesn't write a check to do a short sale. We go over your specific numbers together before you decide anything.
The Florida fine print (read this part)
Two things every Florida homeowner should understand before a short sale:
Florida is a recourse state. A lender can pursue the remaining balance, called a deficiency, for up to five years unless it's waived in writing as part of the approval. Getting that waiver is something I push for, and you want it in writing.
Forgiven debt can be taxable. When a lender forgives part of what you owe, the IRS may treat that forgiven amount as income. The rules change and there are exceptions, which is exactly why you talk to a CPA about your specific situation.
I'm a REALTOR®, not an attorney or a CPA. For the legal and tax pieces, you want those professionals in your corner, and I'll tell you when it's time to bring them in. A HUD-approved housing counselor is also free and worth a call.
Who this is for
Homeowners across Northeast Florida, St. Johns, South Duval, St. Augustine, the whole First Coast, who are underwater, behind on payments, facing foreclosure, or just seeing the writing on the wall and wanting to get ahead of it. Whether a short sale is even the right answer depends on your situation, and sometimes it isn't. I'll tell you straight either way.
Think a short sale might be your situation?
Every file is different, and sometimes a short sale isn't the right answer. The fastest way to find out is a straight, no-pressure conversation. If you're a Northeast Florida homeowner who's underwater or behind, start here: tell me about your situation and I'll give you an honest read on where you stand.
Jim Armstrong, REALTOR® · Momentum Realty (904) 671-4161 · JimArmstrong904@gmail.com
This post is general information, not legal, tax, or financial advice. Consult a licensed attorney, CPA, or HUD-approved housing counselor about your specific situation. Jim Armstrong is a licensed real estate agent (REALTOR®) with Momentum Realty.
