[Home](https://realestateworks.com/) → [Services](https://realestateworks.com/services) → Short sale California · Short sale # Owe more than your California home is worth? A short sale lets you sell for less than you owe, if your lenders approve the terms. Sidney Manzo, a San Gabriel Valley agent in real estate since 1990, prepares the lender package and manages offers through approval. Ask a tax advisor about deficiency questions. Talk with Sidney. [Call (626) 296-2900](tel:+16262962900)[En español](https://ayudaparavendercasa.vercel.app/services/short-sale) Home value What’s my home worth? Get my free home review ## Considering a short sale? A property-specific market review and a discussion of the real-estate file. Lender approval is required and not assured. A conversation does not create a listing agreement or agency relationship. [Book a seller consultation](https://realestateworks.com/book?kind=seller-consultation&from=%2Fservices%2Fshort-sale&topic=Short+sale)[(626) 296-2900](tel:+16262962900) ## What a short sale is A short sale is a sale in which the holder of the loan agrees, in writing, to accept less than the remaining amount of the debt secured by the property. The owner does not set that acceptance. The lender — and, where the loan has an investor or a mortgage insurer, those parties as well — does. The house is typically offered at a market-supported price, not at the loan balance. The written approval, if it comes, is what tells escrow what net the lender will take and on what conditions. This page does not promise approval. ## Why an owner might consider one Homeowners sometimes consider a short sale when the expected net from a conventional sale would not cover the secured debt, or when they want to explore a marketed sale rather than wait for a foreclosure calendar. Servicers often also look for documented hardship — a change in income, employment, family, or health that makes continued payment unsustainable. Simply owing more than the house might sell for is not, by itself, a decision. Whether a short sale is even available for a specific loan is a lender and professional question. ## How it differs from other paths A short sale is not a foreclosure, a deed-in-lieu, or a loan modification. An ordinary listing can close if the owner can convey clear title and the buyer performs. A short sale adds lender underwriting, timelines the lender controls, and possible junior-lien issues. Buyers who will wait, and buyers who will not, are different pools. A foreclosure calendar, if one is already running, is a legal fact. - A listing by itself does not stop, delay, or prevent a foreclosure. - A complete loss-mitigation application submitted to the servicer can trigger federal procedures under CFPB Regulation X, 12 C.F.R. § 1024.41, and may also implicate California dual-tracking and foreclosure rules, depending on timing and the facts of the file. Those procedures contain exceptions and depend on the timing, completeness, and circumstances of the application. They do not promise that a short sale will be approved or that a noticed sale will be postponed. - Short-sale listing periods and short-sale agreements are among the loss-mitigation arrangements the federal rule contemplates. That is a description of the regulation, not a promise that any particular application will pause a foreclosure. Whether any protection applies, and for how long, is a question for the servicer’s file and, if needed, a California attorney. Nothing on this page is a foreclosure-stop claim. ## California Code of Civil Procedure § 580e California publishes an anti-deficiency statute that can apply to certain short sales. It is not a blanket wipe-out of every remaining balance, and this page is not legal advice. The protections and remedies differ depending on whether the debt is secured solely by a qualifying dwelling. Additional collateral, co-signer obligations, or other security can materially change the analysis. Whether section 580e applies depends on the applicable law, the loan and security documents, the identity of the parties, the collateral, the written consent, the statutory conditions, and the circumstances of the sale — not on a website, and not on the approval letter standing alone. - When the note is secured solely by the qualifying dwelling — § 580e(a)(1) Section 580e(a)(1) applies where the note is secured solely by a deed of trust or mortgage on a dwelling of not more than four units, and the statutory conditions are satisfied. In that setting it provides that no deficiency shall be owed or collected, and no deficiency judgment shall be requested or rendered, when the owner sells for less than the remaining indebtedness in accordance with the holder’s written consent — after title has been voluntarily transferred and recorded, and the agreed proceeds have been tendered. Section 580e(b) provides that the holder shall not require additional compensation, aside from the proceeds of the sale, in exchange for that written consent. A purported waiver of those subdivisions is void. - When the note is not secured solely by that dwelling — § 580e(a)(2) Section 580e(a)(2) addresses a different situation: when the note is not secured solely by a deed of trust or mortgage on that one-to-four-unit dwelling. Its language is not the same as (a)(1). It addresses when a deficiency judgment may be rendered and treats resulting rights and remedies in a manner tied to section 580d. A consumer should not read (a)(2) as the same “no deficiency shall be owed or collected” rule that (a)(1) states for solely secured notes. Additional collateral, co-signer obligations, or other security can materially change which subsection, remedies, or other legal rules apply. Whether section 580e applies at all is a legal determination. - Who and what the statute does not cover Section 580e(c) does not limit a holder’s remedies for fraud with respect to the sale or waste with respect to the property. Section 580e(d) states that the section does not apply if the trustor or mortgagor is a corporation, limited liability company, limited partnership, or political subdivision of the state, and does not apply to certain regulated bond or public-utility liens. Do not treat this summary as a promise that a remaining balance will be erased, uncollectible, or unenforceable. Counsel should review the complete file. ## Junior liens and other claims Junior lienholders are separate holders. A first-lien approval does not by itself resolve junior liens or other claims against the property or the borrower. Each affected lienholder may have separate approval, payoff, release, or deficiency issues. Whether a junior who consents is covered by section 580e, and what that consent actually does, are legal questions. Title, escrow, and counsel — not a citywide market snapshot — read that file. ## A step-by-step path owners often follow Every loan is different. The order below is a practical map of common servicer practice and California real-estate procedure. It is not a legal requirement and not a promised timeline. Files commonly take months. Some lender reviews take many weeks after a complete package is submitted. None of those periods is a promise for any file. The circumstances of the loan — hardship, investor rules, junior liens, and a buyer who will wait — influence the calendar. ## 1. Assess whether a short sale is even in view A useful first look is two numbers that this page cannot invent: what the house might reasonably sell for, and what the servicer says is owed, including arrears and fees. A licensed real-estate professional can discuss an advisory market estimate for planning — not an appraisal and not a promised sale price. A payoff quote comes from the servicer. Compare other paths with qualified professionals: a conventional sale if equity exists, a modification or refinance if the servicer will consider one, a deed-in-lieu, or, if notices have already been recorded, the foreclosure calendar. California Courts publish consumer self-help on foreclosure. Do not stop making payments solely to “qualify” for a short sale without written guidance from the servicer. A conversation is not that guidance. ## 2. Assemble the professionals A listing, if you later choose one, is a written agreement with a California DRE-licensed real estate agent. Business and Professions Code section 10131 describes activities that, when done for compensation, generally require a real-estate license — including negotiating the sale of real property and certain services in connection with loans secured by real property. A person who, for compensation, performs activities that fall within California’s real-estate licensing laws may need an appropriate license unless an exemption applies. A licensee does not replace the other desks. - A CPA or enrolled agent for cancellation-of-debt income, Form 1099-C, and any exclusion that might apply. The IRS discusses canceled-debt income and, separately, Form 982 for certain exclusions, including insolvency. Whether any exclusion applies, and how California tax rules treat the same event, are questions for a tax professional. We do not give tax advice and do not state a California tax result here. - A California attorney when junior liens, other collateral or co-signer obligations, complex title, an entity owner, active foreclosure, or the reach of section 580e is in question. - A HUD-approved housing counselor, if you want an independent review of options. Authorization forms let a listing agent, once engaged, speak with the servicer. Commission, if a listing is later signed, is typically paid from sale proceeds at closing only if the lender allows it. The amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker. That is not a promise of a particular fee or of approval. California and federal law impose restrictions on certain advance-fee and mortgage-assistance arrangements. The rules differ depending on the service and circumstances — including the DRE review requirements under Business and Professions Code section 10085 and Commissioner’s Regulation 2970, trust-fund handling, and a separate prohibition on advance fees for residential loan modifications. A broker should confirm applicable DRE and federal requirements before requesting or collecting any advance fee. ## 3. Gather the hardship file Servicers generally will not review a short sale on a slogan. They ask for a package. Incomplete files delay the review. What any particular servicer wants is in its own forms, not on this page. - A hardship letter that states the circumstances, the timing, and the effect on the ability to pay - Recent pay stubs, tax returns, and bank statements as the servicer specifies - A monthly budget or financial statement listing assets and liabilities - Current mortgage statements and a payoff request - Authorization forms so the servicer may speak with the listing agent - A market file the licensee can prepare — a comparative market analysis or similar support, which is not an appraisal - A listing agreement, once one is executed - HOA, tax, and junior-lien information if those exist Be prepared for updates. A package that was complete last month may not be complete when the offer arrives. ## 4. Contact the servicer The number on the mortgage statement is the place to request the short-sale or hardship package from the loss-mitigation desk. Follow the servicer’s forms. Some want the package before a listing; some want a listing and an offer first. Stay in documented contact. Do not rely on a verbal assurance that a file is “approved” or “almost done.” ## 5. Value the house and, if you later choose, list it A listing is a written agreement, not a website visit. If you later authorize one, the house is typically offered on the open market at a market-supported price — not at the loan balance. Some servicers want that exposure before they fully review an offer. Disclose that the sale is subject to lender approval. Short-sale files are often presented as-is. An as-is provision does not by itself eliminate applicable California disclosure duties. Whether the statutory Transfer Disclosure Statement requirements of Civil Code section 1102 apply depends on the transaction and any applicable statutory exemption, including those listed in section 1102.2. Ask a California attorney about disclosure on a specific file. Price and marketing must still follow fair-housing and advertising rules. A citywide median is not the list price. Examples, estimates, market statistics, or hypothetical savings on this site are not individualized promises of approval, debt forgiveness, a net, a timeline, a buyer, a no-out-of-pocket close, relocation assistance, or the ability to avoid foreclosure. ## 6. Market the property and receive offers The buyer pool is different from an ordinary listing. The contract will usually be contingent on the lender’s written approval, and the calendar is longer. Well-documented funds or financing, and a buyer who understands that wait, matter more than a high number that will not survive review. Availability of a particular buyer is not assured. Delays cause dropouts. That is a pattern, not a prediction for your address. ## 7. Accept an offer subject to lender approval If you later accept an offer, it is typically on a California purchase agreement with short-sale addenda. The contract does not by itself resolve the lender’s deficiency or lien issues. The lender’s written approval establishes the conditions under which the proposed sale may proceed, if those conditions are satisfied. You are not asked to accept the first number that arrives. Nothing on this page creates a listing or an accepted offer. ## 8. Submit the complete package A typical submission includes the executed contract, the hardship file, a preliminary title report, an estimated closing statement or net sheet, buyer documentation, and whatever else the servicer lists. If junior liens exist, each holder generally reviews and consents separately, often on a reduced payoff the junior may or may not accept. A first-lien package does not, by itself, resolve a junior’s claim. None of those consents is promised. ## 9. Lender review, valuation, and negotiation The servicer commonly orders a broker’s price opinion or an appraisal to test the contract price against its own view of value. It then reviews hardship, the financials, the expected net versus a foreclosure path, and any investor guidelines that apply. The lender may counter on price, fees, close date, or other conditions. Multiple desks — servicer, investor, mortgage insurer — can extend the file. Keep the property maintained and the buyer informed. None of that is a promise that the review will finish in a stated number of days. ## 10. The approval letter If a holder approves, it typically issues a written approval. That letter is a critical document — required net proceeds, a closing deadline that is often short, allowed fees, lien-release terms, and any language about deficiency or relocation assistance. It should be reviewed together with the purchase contract, short-sale addendum, escrow instructions, lien-release documents, other closing documents, the loan and security instruments, and applicable law. Where the remaining balance, extra seller payments, junior liens, or additional collateral are in question, a California attorney should review the complete file. An approval is time-sensitive. Missing its deadline can void it. A written approval is not a closed escrow, and it is not, standing alone, what creates every statutory protection. ## 11. Close escrow Closing, if it occurs, runs through ordinary California escrow and title. Buyer funds are disbursed to the approved net sheet and the closing instructions. The applicable lienholder releases its lien when the conditions for its release have been satisfied. That does not, by itself, resolve junior liens or other claims. Occupancy and the vacate date are in the contract and the closing documents, not on this page. Seller net at closing — whether the seller pays nothing, receives relocation funds, or is asked for something a consent letter does not allow — is controlled by those documents. Nothing here promises a zero-cost close or a relocation check. ## 12. After closing — credit, taxes, and the remaining balance A short sale may be reflected in a consumer’s credit history. The reporting and its effect on a particular credit score depend on the circumstances and the reporting practices involved. Waiting periods for a later mortgage are credit and lender questions. We do not quote those periods. Forgiven debt may be reported as cancellation-of-debt income on IRS Form 1099-C. The IRS discusses exceptions and exclusions, including insolvency reported on Form 982. Whether any exclusion applies, and how California tax rules treat the same event, are questions for a CPA. We do not state a California tax result. Whether any remaining debt can be collected after a short sale depends on the applicable law, loan and security documents, the identity of the parties, the collateral securing the debt, the written consent, and the circumstances of the sale. Section 580e may provide important protections in qualifying transactions, but counsel should review the complete file. Future homeownership is not something a listing website can script. ## Common complications Files often meet more than one of these at once. None of them is a reason to treat a website as a listing. - Junior liens that will not consent, or will consent only on terms the first lender will not accept - Mortgage insurance or an investor that adds another review - A buyer who will not wait through the lender’s calendar - An incomplete or stale hardship package - A Notice of Default or Notice of Trustee’s Sale already on the calendar — a listing by itself does not stop foreclosure; a complete loss-mitigation application may trigger separate federal or state procedures, with exceptions, and still does not promise a short sale - Occupancy, condition, or an as-is presentation that still requires California disclosures ## What a real-estate professional can and cannot do After you authorize a listing, Sidney can prepare a market file, present the house, help assemble the package the servicer requests, and negotiate within the listing agreement. A licensee cannot promise approval, a timeline, a net, a deficiency waiver beyond what the law and the documents provide, a tax result, a buyer, a no-out-of-pocket close, relocation assistance, or that foreclosure will be avoided. Advertising and this page must not claim otherwise. Examples, estimates, or market statistics are not individualized promises. Federal loss-mitigation procedures under 12 C.F.R. § 1024.41 — including evaluation of a complete application and certain notices — belong to the servicer. Those procedures contain exceptions and depend on the timing, completeness, and circumstances of the application. They do not create a right to a short sale. California dual-tracking and foreclosure rules, if they apply, are legal questions for counsel. ## City notes This page provides general information about short sales in California. City-specific pages provide additional local information where available. ## Cities we serve City-specific notes, when published, appear on each city hub. Open a matching circumstance page where one exists, or browse the city directory. - ### Short sale real estate agent in Pasadena, CA Open city guide - ### Short sale real estate agent in Alhambra, CA Open city guide - ### Short sale real estate agent in Monrovia, CA Open city guide - ### Sell a home in Pasadena, CA Open city hub - ### Sell a home in Alhambra, CA Open city hub - Directory Cities we serve Browse ## Related circumstances Adjacent guides for sellers whose situation may overlap. Each page keeps its own factual notes — nothing here invents fees or promises outcomes. ### Foreclosure help You can often list and sell before a trustee sale, but a listing alone doesn't stop or postpone foreclosure. Sidney Manzo, a San Gabriel Valley agent in real estate since 1990, reviews your timeline and lists the home on the open market. Talk with Sidney, and ask a HUD-approved counselor about loan options. Open guide ### As-is sales As-is means no agreed repairs, but California sellers still disclose known material facts. See how pricing in current condition works. Open guide ### Back to services Compare listing-side service levels and fees on the services index. View services Plan the numbers - [Seller net sheet Estimate what a sale may net after loans, costs and transfer tax.](https://realestateworks.com/tools/seller-net-sheet) [See all eight tools](https://realestateworks.com/tools) ## Questions **Will the lender approve my short sale?** No one on this site can promise that. Approval is the lender’s decision. **Does California law automatically erase the remaining loan balance?** Not automatically. Section 580e(a)(1) and section 580e(a)(2) are different rules. Additional collateral, co-signer obligations, or other security can change the analysis, and junior liens are separate. Whether any remaining debt can be collected depends on the applicable law, the loan and security documents, the parties, the collateral, the written consent, and the circumstances of the sale. Counsel should review the complete file. This is not legal advice. **Can a short sale be sold as-is?** As-is is often the contract posture. An as-is provision does not by itself eliminate applicable California disclosure duties. Whether the Transfer Disclosure Statement requirements apply depends on the transaction and any statutory exemption. Ask a California attorney about a specific file. **What about junior liens?** Each holder generally reviews and consents separately. A first-lien short sale does not, by itself, resolve a junior’s claim. Counsel should review the complete file. This is not legal advice. **What if I am also concerned about foreclosure?** A short sale and a foreclosure-related listing conversation are different paths. This page cannot calculate a deadline, and a short sale is not assured to prevent foreclosure. **Does asking for a review list the house?** No. An initial conversation or home-value review does not create a listing agreement or agency relationship. ## Sources 1. [California Courts — Guide to foreclosures](https://selfhelp.courts.ca.gov/foreclosures) 2. [California Code of Civil Procedure § 580e](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP§ionNum=580e) 3. [California Business and Professions Code § 10131](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=10131) 4. [California Civil Code § 1102 (disclosure on transfer of residential property)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1102) 5. [California Civil Code § 1102.2 (exemptions)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1102.2) 6. [CFPB Regulation X, 12 C.F.R. § 1024.41 — Loss mitigation procedures](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) 7. [California DRE — Essential Elements of an Advance Fee Agreement (August 4, 2026)](https://www.dre.ca.gov/Newsroom/DRE_Updates/2026_08_04_Essential_Elements_Advance_Fee_Agreement.html) 8. [HUD — Talk to a housing counselor](https://www.hud.gov/stat/sfh/housing-counseling) 9. [IRS Tax Topic 431 — Canceled debt](https://www.irs.gov/taxtopics/tc431) 10. [IRS — About Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness](https://www.irs.gov/forms-pubs/about-form-982) ## Who reviews your home? Sidney Manzo, Agent, CA DRE #01108914. - In real estate since 1990 - 155+ closed sales - RE/MAX Hall of Fame - Member, Pasadena Association of REALTORS® and C.A.R. - Works in English and Spanish. [About Sidney](https://realestateworks.com/about) RE/MAX Dream Properties (ASLG Inc), CA DRE #02142193 Sidney Manzo, CA DRE #01108914, licensed in California. Informational only — not legal, tax, financial, foreclosure, or probate advice, and not an appraisal. Nothing on this page creates a listing agreement or agency relationship. Equal Housing Opportunity. --- Sidney Manzo, CA DRE #01108914 · RE/MAX Dream Properties (ASLG Inc), CA DRE #02142193 · (626) 296-2900 Source page: https://realestateworks.com/services/short-sale