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Is a Texas Short Sale the Best Option for Divorcees Struggling with Mortgage Payments?

(Both the video and article offer distinct perspectives and information. Be sure to check out both for a comprehensive understanding. The video provides visual clarity, while the article delves into specific details. Together, they provide valuable insights to help you navigate your situation effectively.)

Facing financial challenges during a divorce can be overwhelming, especially when struggling to maintain mortgage payments. In such situations, a short sale emerges as a viable alternative to foreclosure, providing a chance to sell your home with some control and minimize the impact on your credit score.

Seeking guidance from a skilled real estate agent specializing in short sales, particularly one experienced in divorce situations, along with potential legal assistance, can greatly aid in navigating this process effectively. As divorce rates rise and financial struggles become more common, many couples must decide what to do with their jointly-owned home, particularly when equity is lacking. In such cases, a Texas short sale offers a faster exit from the marital home and an opportunity to alleviate financial burdens.

A short sale may become necessary due to financial hardships such as job loss, medical bills, or other unexpected situations that make it difficult to afford mortgage payments. Additionally, an underwater mortgage occurs when the amount you owe on your house exceeds its current market value. Opting for a short sale in this scenario can help you avoid foreclosure and minimize financial losses.

In essence, a short sale serves as a proactive solution to alleviate the burden of unmanageable mortgage debt.

Here's a seven-step process tailored for couples going through a divorce and considering a short sale. It's crucial to understand that each situation is unique, and individual circumstances will vary.

Step 1:

Open communication between spouses is crucial when considering a short sale, as it requires both parties' agreement. Engage in honest and transparent discussions with your soon-to-be-ex about the possibility of a short sale. It's essential to ensure that this decision aligns with your divorce settlement and the overall goals for your property. Consulting a lawyer specializing in divorce and real estate can provide invaluable legal advice and guidance tailored to your specific situation.

Step 2:

Finding the right short sale realtor is crucial, especially in situations like yours. Experience is key, and as a certified foreclosure/short sale expert, SFR, specifically trained for these scenarios, I am well-equipped to assist you. I understand the complexities involved and would be delighted to speak with you further, offering my expertise to help navigate this challenging time with confidence and clarity. You can view my designation here: link to designation page!

Step 3:

As your realtor, I assist you in gathering the essential documentation needed for the short sale process. This typically includes:

  • Mortgage statements

  • Proof of financial hardship, such as job loss documents or medical bills

  • Property title and appraisal documents

Step 4:

Preparing your home for sale can significantly impact its appeal to potential buyers. Enhancing its appearance can attract more interest and potentially lead to better offers, which is advantageous for getting the short sale approved by the lender. Consult with your realtor about potential changes or improvements that could enhance your home's marketability. They can offer valuable advice on which upgrades are worth investing in.

Step 5:

When it comes to dealing with lenders, it varies, but here's a typical scenario:

First, we will work on creating a package. This package is crucial because it's what I'll present to your lender. It outlines your financial hardships and explains why we're requesting a short sale. It also includes details about your property and the current market analysis.

Next comes the negotiation phase. This can be a bit of a back-and-forth process. I'll handle all the discussions with your lender, aiming to reach a sale price that works for both you and the lender.

So, while the realtor takes the lead on the negotiation process, it's a collaborative effort that involves you and the lender working towards a solution.

In a Texas short sale, it's typically the realtor who handles negotiations with the lender, rather than the mortgage owner themselves. This is because realtors bring expertise to the table, understanding the nuances of short sale negotiations and how to effectively communicate with lenders. With their experience in negotiations, realtors can navigate the back-and-forth process with ease, maximizing the chances of approval. They're also well-versed in the documentation required for negotiations, such as financial hardship proof, property details, and market analysis, ensuring clear and compelling communication with the lender throughout the process.

While the realtor takes the lead on negotiations, you'll still be involved in the process. You'll need to provide accurate financial information and documentation to support the short sale request. You may also be called upon to answer questions or clarify details during the negotiation.

The mortgage owner, usually a bank or lending institution, ultimately decides whether to approve the short sale. They review the package provided by your realtor and may seek clarification or additional information as needed.

Step 6:

Finding a Pre-Approved Buyer

A buyer with pre-approval demonstrates they're serious and financially qualified. This strengthens your offer and streamlines the closing process, which is crucial for a quick sale. As a realtor, I would never accept anything less than pre-approval, as it ensures that the buyer is committed and financially capable.

Step 7:

Closing & Moving Forward

Once an offer is accepted and the lender approves the short sale, the closing process follows a path similar to that of a traditional home sale. Both spouses will need to sign off on the closing documents, marking an important step as you move forward in the process.

Important Reminder:

It's crucial to consult with a tax advisor regarding any potential tax consequences resulting from forgiven debt by the lender. Although less severe than foreclosure, a short sale can still affect your credit score for several years. Be mindful of this when considering your options.

A Texas short sale during a divorce can be a complex process, but with open communication, collaboration, and the right team in place, you can achieve a quicker exit and take a step towards financial independence.

In a Texas short sale, the lender may forgive the remaining balance owed on the mortgage (deficiency balance) after the short sale, but they are not obligated to do so. Here's a breakdown of the process:

Lender Forgiveness: This is the ideal outcome in a short sale. The lender agrees to accept the sale price of the house, even if it's less than what you owe, and forgive the remaining difference. This is not guaranteed, but it's a possibility through negotiation with your lender. Several factors can influence the lender's decision, such as the severity of your financial hardship, the current market conditions, and the overall costs they would incur if they foreclosed on the property.

Mortgagee Responsibility: Unlike foreclosure, where you are legally liable for the deficiency balance, there's no guarantee you'll owe the remaining amount after a short sale. However, there are a few things to consider:

  • While the lender may forgive the debt, it's part of the negotiation process. Your realtor will work to present a compelling case that justifies the short sale and encourages the lender to forgo the remaining balance.

  • Some lenders may have specific policies regarding deficiency balances in short sales. It's important to understand your lender's stance early on in the process.

  • Even if the lender forgives the debt, the forgiven amount may be considered taxable income by the IRS. It's crucial to consult with a tax advisor to understand the potential tax consequences specific to your situation.

While I discuss this topic in another article, here's a key difference to note about Short Sale vs. Foreclosure:


Short Sale


Credit Score Impact

Less severe


Control Over Process



Time to Complete



Deficiency Balance



If you're encountering financial challenges amid a divorce and finding it difficult to maintain mortgage payments, a short sale may offer a viable alternative to foreclosure. While it's not a flawless remedy, it empowers you to sell your home with a degree of control while mitigating the lasting impact on your credit score. Seeking guidance from a skilled real estate agent specializing in short sales, particularly one experienced in divorce situations, along with the potential assistance of a lawyer, can greatly aid in navigating this process with confidence and efficacy.

Amanda Allen, Realtor


(903) 603-0648


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