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Short Sale vs. Foreclosure: A Home Buyer’s Guide

If you’re looking for cheap housing, you may have seen terms like “short sale” and “foreclosure.” These terms describe different types of distressed property. They’re both affordable, but they come with drawbacks to keep in mind.

Altitude Home Loans is your go-to for home purchasing services in Tucson, AZ. The short sale vs. foreclosure topic can be confusing, so we’re here to answer all your questions. Call us at 520-500-1010 for more information.

Short Sale

Many people have heard of foreclosure, but short sales are more obscure. A short sale is a voluntary sale process between owners and lenders. A short sale occurs when a homeowner can’t keep up with their mortgage payments and needs to sell their house for less than it’s worth.

All proceeds from the sale go to the lender. The lender might forgive the difference on the loan or charge the original owner to pay for the remainder. Although it won’t tank the original owner’s credit score, a short sale does impact the homeowner’s credit.

Foreclosures are a last resort that can hurt lenders and owners alike. Short sales are more forgiving on owners and lenders. In addition to reducing financial risk, short sales offer an affordable property for buyers. 

Short Sale Pros and Cons for Home Buyers


  • Short sale homes are usually in better shape than foreclosed properties.
  • These homes are relatively cheap.
  • There’s less competition.


  • The sale is more likely to fall through.
  • Buyers must negotiate with lenders, owners, and realtors.
  • It can take a long time to finalize a sale.


A foreclosure occurs when a homeowner stops paying their mortgage. In many cases, they also abandon their homes. During a foreclosure, the lender seizes control of the property and tries to recoup the money they lost.

Lenders drastically drop the sale price so they can sell these homes as fast as possible, which is ideal for buyers. Realtors can help you find foreclosed homes, and these properties are occasionally sold at public auctions.

Foreclosure Pros and Cons for Home Buyers


  • Foreclosure creates extremely cheap homes.
  • It’s a fast, low-effort buying process.
  • All previous liens are removed from the home title.


  • Foreclosed homes are usually in poor condition, and inspections may not be possible.
  • Although they are cheaper overall, there’s a large up-front investment for purchase and repairs.
  • Lenders usually prefer cash payment.

Short Sale vs. Foreclosure: Which is Better?

A short sale is better if you need a property that’s in decent condition. These homes are affordable, but they’re also harder to lock down. They’re generally a better investment for long-term homeowners.

Foreclosed properties are usually in bad shape but are quite easy and affordable to buy. These homes are great for flippers and anyone looking for a quick investment opportunity. 

Learn More About the Housing Market

If you want to transfer taxes on a mortgage or learn more about short sales, Altitude Home Loans is here to help. Call us at 520-500-1010 to find the perfect home near you. 


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