How long does a short sale take compared to a cash sale?

A short sale takes 3 to 12 months because the lender must review and approve the buyer's offer. A cash sale closes in 7 to 21 days with no lender approval needed — making it far faster for homeowners facing urgent deadlines.

Does a short sale hurt your credit as much as foreclosure?

A short sale typically damages credit less than a foreclosure — it is reported as 'settled for less than owed' and drops scores 100 to 150 points. A foreclosure drops scores 150 to 200 points or more. A cash sale that pays off the mortgage fully has no negative credit impact.

Can I sell for cash instead of doing a short sale?

Yes, in most cases. A cash buyer can close in 7 to 21 days without lender approval. If the cash offer covers your mortgage payoff, you avoid the short sale process entirely. Even if you are somewhat underwater, a cash sale often makes more financial sense than waiting 6 to 12 months for lender approval.

Short Sale vs. Cash Sale: Which Is Right for You?

Q: Do I owe taxes on a short sale deficiency?

The IRS may treat forgiven mortgage debt as taxable income under cancellation of debt rules. Exemptions exist for insolvency and primary residences, but the rules are complex. Consult a tax professional before completing a short sale.

If you owe more on your mortgage than your home is worth, a short sale lets you sell for less than what you owe — with lender approval. A cash sale skips the lender entirely and closes in days. For most homeowners facing financial hardship, a cash sale is faster, simpler, and less damaging to credit. The right choice depends on your timeline, how underwater you are, and how urgent your situation is.

Chitty Buys Houses is a nationwide cash home-buying service that buys houses in any condition, helping homeowners sell fast without repairs, fees, or waiting.

What Is a Short Sale and How Does It Work?

A short sale occurs when a lender agrees to accept less than the full mortgage balance so the homeowner can sell the property. You list the home, find a buyer, then submit that offer to your lender for approval. The lender reviews your financial hardship documentation and decides whether to accept the short payoff. According to the Consumer Financial Protection Bureau (CFPB), short sales typically take 3 to 12 months from listing to closing — and lender approval is never guaranteed.

What Is a Cash Sale and How Does It Work?

A cash sale means selling directly to a buyer who does not need a mortgage. No lender approval, no hardship documentation, no waiting. You contact a cash buyer, receive an offer within 24 to 48 hours, and close in 7 to 21 days. If the cash offer covers your mortgage balance and closing costs, you walk away with no deficiency. Even if you are underwater, you can use the cash sale to stop carrying costs and negotiate any remaining deficiency with your lender from a cleaner position.

How Do Timelines Compare?

Short sales take 3 to 12 months — months of continued mortgage payments, carrying costs, and credit uncertainty while you wait for lender approval that may never come. Cash sales close in 7 to 21 days. If you are facing pre-foreclosure or an active foreclosure, the speed of a cash sale can mean the difference between stopping the process and losing the home to auction.

How Does Each Option Affect Your Credit Score?

Both a short sale and a foreclosure harm your credit, but they are reported differently. A short sale typically appears as "settled for less than owed" and drops your credit score 100 to 150 points. A cash sale — when proceeds cover your full balance — reports as a normal paid-off mortgage with zero negative impact. If your cash sale proceeds fall short of your mortgage, the lender may report a deficiency, but you can negotiate that separately. Call (888) 913-9906 to discuss your situation and explore your options before committing to a short sale.

Will You Owe Taxes After a Short Sale?

When a lender forgives the deficiency in a short sale, the IRS may treat the forgiven amount as taxable income — called cancellation of debt (COD) income. Exemptions exist for insolvency and primary residences under the Mortgage Forgiveness Debt Relief Act, but those rules have changed over time. Always consult a tax professional before completing a short sale. In a cash sale where proceeds pay off the full mortgage balance, no debt is forgiven and no COD income is created.

Which Option Is Better for Your Situation?

Choose a cash sale when you need speed, certainty, or want to protect your credit. Choose a short sale only if your property is so deeply underwater that no realistic cash offer would come close to covering the balance, and you cannot bridge the gap. Even then, get a cash offer first — many homeowners are surprised by how close it comes. Compare options with our guide to selling when behind on your mortgage and the Cash Buyer vs. Realtor comparison.

Common situations that lead homeowners here: divorce, unexpected relocation, bankruptcy, and job loss. Cash buyers purchase in any condition regardless of what led you to this point.

Get a Free Cash Offer Before Pursuing a Short Sale

Before you spend months waiting for lender approval, find out what a cash buyer will pay. It costs nothing and carries no obligation. Call Chitty Buys Houses at (888) 913-9906 or request your free offer online. We respond within 2 hours during business hours.