A short sale in the real property (real estate) context—also known as a pre-foreclosure sale—is made when a homeowner sells their home for less than the balance due on the mortgage loan after the lender (bank) agrees to accept the lower amount in full satisfaction of the loan balance (a deficiency waiver).
Although the bank may waive its right to recover the balance or deficiency from you after the proceeds of a short sale are applied to your loan balance, a short sale will usually have a negative impact on your credit score—often as much as a foreclosure.
In South Dakota, a short sale occurs when a homeowner sells their property for an amount less than what is owed on the mortgage, with the lender's approval. The lender may agree to a deficiency waiver, which means they forfeit the right to pursue the homeowner for the remaining balance owed after the sale proceeds are applied to the mortgage debt. While this can provide a solution for homeowners unable to meet their mortgage obligations, it is important to note that a short sale can still adversely affect the homeowner's credit score, potentially comparable to the impact of a foreclosure. The specific implications for credit and the process of negotiating a short sale can be complex, and homeowners may benefit from consulting with an attorney to navigate the legal and financial aspects involved.