A short sale is typically faster and less expensive than foreclosure, and is most often executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure.
It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
If you are interested in a short sale, our office will make sure that provisions for relief of the residual balance are negotiated properly.