Photo above: to protect the seller’s privacy, this image is AI-generated for illustration and does not show the actual home.
AI Summary
In 2026, Jack Ma (REALTOR®, Century 21 Masters, DRE #01869426) closed his first short sale since 2011: a long-time La Habra homeowner who was already behind on payments when the listing started in September 2025. After about six months of trying a traditional sale, the plan shifted to a short sale. The home sold for $808,000 through a lender-approved short sale. The foreclosure auction was postponed four times. When the first buyer stalled over taking on the home’s solar lease, escrow was canceled about three weeks before the auction, and a second buyer who assumed the lease closed within 30 days, in October 2026. The seller avoided foreclosure, left with no remaining solar lease obligation, and moved on. Jack says more homeowners are facing financial stress again, and that calling early keeps more options open.
This fall I closed something I hadn’t needed to do since 2011: a short sale in La Habra. It’s a sign of where our market is heading, and I want to share how it worked, what made the difference and what it means for homeowners in North Orange County and the San Gabriel Valley.
To protect the homeowner’s privacy, I’ll describe their situation only in general terms.
What happened with this La Habra short sale?
The seller was a long-time La Habra homeowner who had been through major family and financial changes in a short period. When I took the listing in September 2025, they were already behind on payments. A foreclosure sale date had not been set yet, but time mattered.
Their goals were clear:
- Avoid foreclosure
- Make a clean separation from the home
- Move on without carrying obligations forward
Why did we try a regular sale first?
A short sale wasn’t the starting plan. For about six months, we marketed the home as a traditional sale, aiming for a price high enough to pay off the loan in full so the seller could close without needing lender approval.
The market didn’t support that number. Once it was clear a full payoff wasn’t realistic, and the payment situation wasn’t improving, we shifted to a short sale. Trying the traditional route first meant the seller could make that decision knowing every other option had been tested.
How does a short sale actually work?
A short sale is essentially a settlement with the lender. When a home is worth less than what is owed, the lender can agree to accept less than the full payoff so the home can sell.
Unlike a regular sale, the lender has to approve almost everything:
- The price. The lender typically orders its own valuation to confirm the offer reflects market value. Then it compares two outcomes: how much it would lose by accepting the short sale now, versus continuing to go unpaid until a foreclosure, plus the attorney, trustee and holding costs that come with it. A short sale gets approved when it makes more financial sense for the lender than foreclosing.
- The buyer and the terms. The accepted offer goes to the lender with the seller’s hardship documentation and financials.
- The closing costs. The lender decides which costs it will pay from the sale.
- The approval letter. Once approved, the sale must close within the lender’s deadline and terms.
In most short sales, the seller does not receive proceeds. Questions about any remaining balance, taxes or credit should go to a California real estate attorney and a CPA.
How did we keep the foreclosure auction from happening?
This was the most time-sensitive part. While the home was on the market, the lender moved forward and set a foreclosure sale date. That date doesn’t stop on its own just because a home is listed. Each time the date approached, we had to show the lender that a real sale was moving forward, with an active listing, a qualified buyer and a complete file.
Over the course of this sale, the foreclosure auction was postponed four times. Postponements are always the lender’s decision and are never guaranteed, which is why having the package complete and the follow-up consistent matters so much.
What happened when the first buyer wouldn’t take over the solar lease?
After we secured lender approval and opened escrow, the first buyer became unwilling to assume the home’s leased solar system. I see this with other listings too: many buyers hesitate when a home comes with a solar lease they would have to take over.
The buyer kept dragging the process out. With only about three weeks left before the foreclosure auction, we canceled that escrow to protect the seller rather than risk running out the clock.
We then secured a new buyer who was willing to assume the solar lease, got an updated approval from the lender, had the auction postponed again, and closed within 30 days.
How long did the short sale take?
There was one lender on this property, which helped. Here’s how the timeline worked:
- September 2025: listed as a traditional sale.
- About 6 months: marketed for a full loan payoff, then shifted to a short sale.
- Marketing: the home had 32 showings in total (tracked in ShowingTime).
- First lender approval: about 3 to 5 weeks after submission.
- First escrow canceled: the buyer wouldn’t assume the solar lease, with about 3 weeks left before the auction.
- Updated approval for the new buyer: about 1 to 2 weeks.
- Close: within 30 days of the new buyer, after the auction was postponed again.
- Result: sold for $808,000 and closed in October 2026, before a foreclosure sale took place.
Every short sale is different. Lenders, investors and loan types all move at their own pace.
What made the difference in this short sale?
- A complete package from day one. Missing documents are the most common reason short sales stall.
- Data, not opinions. We shared showing activity and online view data with the lender to support the price.
- Constant follow-up. Short sales reward persistence: checking in, answering requests the same day and tracking every deadline.
- Knowing when to walk away. Canceling a stalled escrow three weeks before an auction is a hard call. Protecting the seller’s timeline mattered more than holding on to a buyer who wasn’t moving.
- Solving the solar lease. The second buyer took over the lease, so the seller left with no remaining solar lease obligation.
- Experience. I handled a number of short sales during the last downturn, and the same discipline still applies.
Why does this short sale matter for the 2027 housing market?
For the past few years, most owners didn’t have to sell. If they didn’t get their price, they waited. Now I’m seeing a new group of sellers under financial pressure:
- Long-time owners whose costs are rising faster than their income
- Recent buyers whose payments kept climbing while the refinance never came
- Small business owners using their home as their main source of cash
Which group is most at risk of foreclosure? Most long-time owners and small business owners have built up equity over the years. Even under pressure, they can usually sell the normal way, on their own timeline. The group to watch is recent buyers from the last two to three years. They haven’t had time to build much equity, so if their costs keep rising, a regular sale may not cover what they owe. That’s where short sales and foreclosures are most likely to show up.
The La Habra seller in this case study doesn’t fit any of these three groups. Their situation came from major life events, the kind that can happen to any homeowner at any time, regardless of the market. When several hit at once, even a long-time owner can end up without enough equity to pay off the loan. In my view, we’ll see more homeowners facing foreclosure in the year ahead. This is not 2008: most owners still have equity and can sell the normal way. But for those who don’t, working with an agent who has handled short sales before can make a real difference. I go deeper on what this could mean for prices in Will Home Prices Drop in 2027?
What options does a homeowner have when payments fall behind?
Every situation is different, and the right choice depends on equity, timing and the lender. Common paths include:
- Talking to the lender about a repayment plan, forbearance or loan modification
- A traditional sale, if there is equity. See what you’d walk away with in a net proceeds analysis
- A short sale, if the home is worth less than what’s owed
- Other lender options, such as a deed in lieu of foreclosure
A HUD-approved housing counselor, a real estate attorney and a CPA can help you weigh these. My role is the real estate side: pricing, marketing, the lender package and getting to the closing table.
When should you call if you’re falling behind?
Earlier than feels comfortable. The longer you wait, the fewer options there are to prevent a foreclosure. A short, confidential conversation now can show whether a traditional sale is still possible, or whether a short sale makes more sense, while there’s still time to choose.
If you own a home in La Habra, Brea, Diamond Bar or nearby and want to understand your options, I’m glad to help, with no pressure and no obligation. You can also read about selling on a shorter timeline or browse La Habra homes.
Behind on payments or worried you might be?
Book a confidential, no-pressure 15-minute call to talk through your options.
Or call (909) 610-5188
Frequently Asked Questions
What is a short sale?
A short sale is a home sale where the lender agrees to accept less than the full loan payoff. It works like a negotiated settlement: the lender reviews and approves the price, the buyer and the closing costs before the sale can close. The lender agrees when the loss from the short sale is smaller than what it expects to lose by continuing without payments through a foreclosure, including attorney and other fees.
How long does a short sale take in California?
It varies by lender and file. In this La Habra case, the lender’s first approval took about 3 to 5 weeks and a later updated approval took about 1 to 2 weeks. A complete package and steady follow-up usually make the biggest difference.
Can a short sale stop a foreclosure auction?
A short sale in progress can give the lender a reason to postpone a scheduled foreclosure sale, but postponement is at the lender’s discretion and is never guaranteed. In this case, the sale date was postponed four times while the short sale was completed.
Can you sell a house with a leased solar system?
Yes, but it adds a step. In many cases the buyer must agree to take over the solar lease and be approved by the solar company; otherwise the options depend on the lease contract. Many buyers hesitate to assume a solar lease, so it helps to gather the lease documents early and disclose the terms up front.
Does the seller receive money from a short sale?
Usually not. Because the lender is accepting less than what is owed, the net proceeds generally go to the lender. Any exceptions are set by the lender’s approval terms.
Should I talk to an attorney or CPA before a short sale?
Yes. Questions about any remaining balance, taxes and credit impact belong with a California real estate attorney and a CPA. A real estate agent handles the sale, the lender package and the negotiation process, not legal or tax advice.
When should a homeowner who is behind on payments call a real estate agent?
As early as possible. The further a foreclosure moves along, the fewer options remain. An early conversation leaves more time to compare a traditional sale, a short sale or other options with your lender.
About the author: Jack Ma is a REALTOR® with Century 21 Masters (DRE #01869426) serving North Orange County, the San Gabriel Valley and the Chino Valley. He helps homeowners with traditional sales, probate and trust sales and, when needed, short sales. Bilingual English and Chinese. (909) 610-5188 · [email protected]
Related Reading
- Will Home Prices Drop in 2027? What the Data Says
- Is the Housing Market Crashing?
- Why Is My Home Not Selling?
- Free Net Proceeds Analysis
Disclaimer: This case study is shared without identifying details to protect the homeowner’s privacy. It is general real estate information, not legal, tax, credit or financial advice. Every short sale is different, lender approval and foreclosure postponements are never guaranteed, and past results do not predict future outcomes. Please consult a California real estate attorney, CPA or HUD-approved housing counselor about your situation. Equal Housing Opportunity.
