When a house is headed to a trustee's sale, the owner has four realistic paths. They differ most in how much cash the owner ends up with and what it does to their credit.
Here is what the owner walks away with on each path, using typical costs.
Illustrative figures. The last bar is not a fixed amount: it is whatever the written offer says, with no commissions or closing costs taken out. Ask an agent for a net sheet and compare the two side by side.
| Let it go to the sale | Short sale | List with an agent | Subject-to sale to a private buyer | |
|---|---|---|---|---|
| Cash to the owner | Usually nothing. If the auction brings more than the debt and costs, the owner can claim the excess, but most sales don't. | Nothing. The lender takes all proceeds; that is what "short" means. Some lenders pay a small moving allowance. | Sale price minus the loan payoff, the missed payments and fees, about 5–6% in commissions, and closing costs. | The cash agreed in the contract, paid at closing. No commissions or closing costs come out of it. |
| Who covers the missed payments and trustee fees | They are added to the debt. | The lender absorbs them, and may reserve the right to pursue the shortfall. | The owner, out of the sale proceeds. | The buyer pays them to bring the loan current. |
| Time needed | None. | Often 3–6 months, and the lender can still say no. | Time to list, find a buyer and close: commonly 45–90 days. | Usually 2–3 weeks. |
| Credit | A completed foreclosure, the most damaging outcome. | Reported as settled for less than owed. | Loan paid in full; late payments remain. | Loan brought current and stays open in the owner's name; late payments remain. |
| Main risk to the owner | Losing all equity. | Months of paperwork with no payout. | Running out of time before the sale date. | The loan is still theirs; they depend on the buyer paying on time. |
| List with an agent | Subject-to sale | |
|---|---|---|
| Sale price / value | $300,000 | — |
| Loan payoff | −$262,000 | loan stays in place |
| Missed payments, late fees, trustee costs | −$14,000 | paid by buyer |
| Commissions (about 5.5%) | −$16,500 | none |
| Seller closing costs, repairs, concessions (about 2%) | −$6,000 | paid by buyer |
| Owner walks away with | about $1,500 | the cash in the offer |
Your numbers will differ. Commissions, repairs and concessions vary by market and by house.
The mortgage remains in the seller's name, and the lender has the right to call the loan due because of the transfer. We disclose both in writing, use a title company, and make payments through a third-party servicer so there is a record. Have an attorney or a HUD-approved counselor (888-995-4673) look at any offer, including ours.
We'll put a written offer next to an agent's net sheet and you can decide.