Texas Short Sale Guide: Sell Your Home and Avoid Foreclosure
A short sale allows you to sell your home for less than you owe on your mortgage—with your lender's approval. It's a way to exit an underwater property, avoid foreclosure, and minimize credit damage. This guide explains how short sales work in Texas, step-by-step.
A short sale is when you sell your home for less than the outstanding mortgage balance, and your lender agrees to accept the sale proceeds as full or partial satisfaction of the debt. It's called a "short" sale because the sale proceeds fall short of what you owe.
Short sales are common when homeowners are underwater (owe more than the home is worth) and can no longer afford the mortgage. Instead of letting the home go to foreclosure, a short sale allows you to exit with less credit damage and potentially avoid a deficiency judgment.
When Should You Consider a Short Sale?
- • You owe more than your home is worth
- • You can't afford your mortgage payment
- • You don't have savings to cover the shortfall
- • You want to avoid foreclosure
- • You're experiencing financial hardship
- • You need to relocate for work
- • You have equity in your home
- • You can afford your payment
- • You want to stay in your home
- • You have cash to bring to closing
- • Your lender won't approve a short sale
How Does a Short Sale Work in Texas?
Call your mortgage servicer's loss mitigation department and tell them you want to pursue a short sale. Ask what documents they require and whether they have a short sale program.
Prepare a short sale package including: hardship letter, financial statements (pay stubs, bank statements, tax returns), comparative market analysis (CMA) showing your home's value, and a purchase offer (once you have a buyer).
Work with a real estate agent experienced in short sales to list your home at fair market value. Disclose to buyers that the sale is contingent on lender approval.
When you receive a purchase offer, submit it to your lender along with your short sale package. The lender will review the offer and either approve, counter, or deny it.
Lender approval can take 30-90 days (or longer). During this time, your lender will order a BPO (Broker Price Opinion) or appraisal to verify the home's value. Follow up weekly.
If your lender approves the short sale, you'll proceed to closing. The lender receives the sale proceeds, and you walk away with no mortgage debt (if they agree to waive the deficiency).
Pros and Cons of Short Sales
- • Avoid foreclosure and its credit damage
- • Less impact on credit score than foreclosure
- • Potential to avoid deficiency judgment
- • Control over the sale process
- • May qualify for relocation assistance (up to $3,000)
- • Still damages your credit (but less than foreclosure)
- • Lender approval can take months
- • No guarantee lender will approve
- • May still owe deficiency if not waived
- • Requires buyer willing to wait for approval
Need a Faster Solution?
Short sales can take 3-6 months and require lender approval. If you need to sell fast, EnterActDFW offers cash purchases that close in 7-10 days—no lender approval needed, no repairs, no commissions.