What Is a Short Sale in Arizona?

Short Answer

A short sale is selling your home for less than the remaining mortgage balance, with the lender's approval. It can be an option when you owe more than the home is worth and cannot continue making payments. The lender agrees to accept the reduced proceeds and release the lien so the sale can close. Short sales involve lender approval, potential credit and tax consequences, and sometimes Arizona anti-deficiency considerations, so professional guidance is important.

Understanding Short Sales in Arizona

How a Short Sale Works

In a short sale, the lender agrees to accept less than the full loan balance from the sale proceeds. This allows the homeowner to sell the property even when its market value is below the mortgage amount. The lender must approve the sale, which adds time and uncertainty to the process.

When a Short Sale May Be Considered

A short sale may be an option to discuss with your lender and a qualified professional when:

• You owe more than the home is worth.
• You can no longer afford the mortgage payments.
• You want to avoid a completed foreclosure.
• The lender is willing to consider a short sale.

Whether a short sale is appropriate depends on your individual circumstances and your lender's policies.

The Process

A short sale generally involves:

1. Listing the home and accepting an offer.
2. Submitting the offer to your lender with financial documentation.
3. Lender review and decision (approval, counter, or denial).
4. Closing the sale with the lender releasing the lien.

Short sales often take longer than traditional sales because lender approval can take weeks or months, and approval is not guaranteed.

Potential Impact on the Homeowner

A short sale can affect your credit. You may also face tax consequences if forgiven debt is treated as income. Arizona's anti-deficiency statutes may provide protection from deficiency judgments on certain residential properties, but this depends on the specifics of your loan, property, and situation. Consult an attorney and a tax professional before pursuing a short sale.

Short Sale vs. Foreclosure

A short sale and a foreclosure are different processes with different consequences. Which is preferable in a given situation depends on individual circumstances. Both are serious matters that require professional guidance.

Arizona Context

Arizona's anti-deficiency statutes (ARS § 33-814 and § 33-729) may affect whether a lender can pursue a deficiency after a short sale or foreclosure on certain owner-occupied, one- or two-unit residential properties. These protections depend on your specific situation. Always consult an Arizona real estate attorney for advice about your case.

Short sales are less common than they were in the years following the housing crash, but they remain a real option for homeowners who are underwater and unable to keep up with payments. The biggest challenge is usually patience—lender approval can take a long time and isn't guaranteed. If you're facing a trustee sale date, a short sale may not move fast enough, which is why understanding your timeline early matters.

— Ryan Michael, Arizona Real Estate Professional

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