When you’re underwater on a Las Vegas home and need to sell, two options come up most often: a short sale and a subject-to sale. Here’s an honest comparison of how each affects your credit, timeline, and financial future.
Short Sale: What It Actually Costs You
A short sale means your lender agrees to accept less than the full loan balance to release the lien. Sounds helpful — but here’s what most sellers don’t know:
- A short sale typically drops your credit score 85–160 points
- It stays on your credit report for 7 years
- The process takes 3–6 months and often falls through
- The lender may still pursue a deficiency judgment for the forgiven amount
- You need lender approval — and they can say no at any time
Subject-To: A Cleaner Exit
In a subject-to sale, we take over your mortgage payments. There’s no default, no negotiation with the lender, no deficiency risk. The loan continues to be paid — just by us instead of you.
- No credit damage — there’s no default on your record
- No lender approval needed — the transfer is between you and us
- Closes in 5–14 days, not months
- No deficiency risk — we’re taking over the full obligation
The Clear Winner
If you need to protect your credit and exit the property without a prolonged battle, subject-to wins by a wide margin. The only scenario where a short sale makes more sense is if the lender is already in advanced default proceedings and a subject-to isn’t feasible in time.
Details to Weigh Before Choosing Either Option
Tax Questions on Forgiven Mortgage Debt
When a lender forgives part of a balance in a short sale, that amount may be treated as income for tax purposes unless an exception applies. Whether it affects you depends on your circumstances and current law. A CPA or tax professional should look at this before you agree to a short sale, not after you get a tax form in the mail.
Deficiency Rules Are Complicated
Whether a lender can pursue you for the shortfall after a short sale depends on the loan, how the agreement is written and state law. Nevada has its own rules on deficiencies. Ask a real estate attorney to review any short sale approval letter, paying close attention to language about waiving or reserving the deficiency.
Why the Loan Stays in Your Name After a Subject-To
In a subject-to sale, the deed transfers but the original loan remains in your name, and the payment history continues to report on your credit. That is why it matters who is making the payments. Our due-on-sale clause explainer covers another point to understand before you sign.
How Each Path Can Affect a Future Home Purchase
Mortgage lenders look at your credit history, your debts and any past short sales or foreclosures when you apply for a new loan. A loan still in your name may count in their calculations. Talk with a loan officer about your plans so you know how each option could affect qualifying for your next home.
Getting a Second Opinion Before You Decide
A HUD-approved housing counselor can review both options at no charge and help you see which fits your goals. If you are underwater, our page on underwater mortgage options in Las Vegas lists other paths, and our article about credit after foreclosure shows what happens if no solution is found in time.
Questions? Call us at (877) 800-3187.