Please read this first. Houston Foreclosure Help is educational. We are not a law firm, not a HUD counselor, and not a real estate brokerage. We do not negotiate short sales or buy houses on this site. This page is not legal, tax, or credit advice.
Updated September 2026. Educational only — not legal advice.
A short sale is a sale of the house for less than the mortgage balance, with the lender’s written approval. A foreclosure in Texas is usually a trustee auction on the first Tuesday after required notices. They are not the same, and a handshake with a “buyer” is not a short sale.
What a short sale actually is
You still sell the home. The buyer’s contract is subject to lender approval. In Texas that is typically the TREC contract plus the Short Sale Addendum. The investor who owns the loan (Fannie Mae, Freddie Mac, FHA, VA, USDA, or a private holder) decides whether to accept less than the payoff and whether to waive a deficiency.
A HUD counselor can help you compare keeping the house (modification, forbearance, reinstatement) with a short sale. This website does not file the package or represent you.
How it differs from a completed foreclosure
- Who decides the price. Short sale: buyer and seller agree, then the bank must approve. Foreclosure: the high bidder at the first-Tuesday sale.
- Your name on the deed. Short sale: you convey by deed at a normal closing. Foreclosure: a trustee’s deed after the auction.
- Credit. Both hurt. A completed foreclosure is usually worse and lasts longer on a credit report. Mortgage investors publish waiting periods to buy again (often around seven years after a foreclosure and shorter after a preforeclosure / short sale). Those rules change. Ask a lender or counselor; do not treat a blog number as a promise.
- Deficiency. Whether you still owe the gap depends on the loan, homestead status, and what the investor agrees to in writing. Get that in the approval letter, not in a text from a stranger.
- Speed. Texas can auction on the next first Tuesday after a 21-day notice. A short sale often takes weeks to months. If the sale date is close, the servicer has to postpone or you need another legal path. A short-sale contract does not, by itself, cancel a posted sale.
When people look at a short sale
Common facts: the house is worth less than the mortgage, you cannot catch up, and you would rather close with a deed than go to the courthouse. If you can keep the home, start with loss mitigation and a HUD counselor — how to try to keep the house and Who to call.
If you have equity, a regular sale that pays the loan in full is usually cleaner than a short sale.
What a short sale is not
- Signing the deed this week to someone who will “handle the bank later.”
- A company that charges a large fee up front to “stop foreclosure” and then maybe sell.
- A subject-to or wrap where the loan stays in your name while someone else takes the deed — that is a purchase structure, not HUD help. See rescue scams.
Clock against the first Tuesday
Ask the servicer, in writing: will they postpone while a complete short-sale package is under review? CFPB rules on complete loss-mitigation applications (including some sale options) can require a review if the file is complete more than 37 days before the sale. Incomplete files do not get that protection. Details: notice of trustee sale.
Frequently asked questions
Can I do a short sale myself without an agent?
The investor still has to approve. Advising an owner on negotiating a short sale is Texas real estate brokerage. This site will not do that work. A HUD counselor can explain options; a licensed broker can list; an attorney can advise on legal risk.
Does a short sale always avoid a deficiency?
No. Only the written approval (and Texas law for that loan type) answers that.
If the first Tuesday is next week, is a short sale realistic?
Often not, unless the servicer postpones. Call the counselor and the trustee the same day. Do not wait on a buyer who has not been approved by the bank.
Related: Keep the house · Texas process · Who to call