Short Sale
vs.
Deed in Lieu
Buffalo NY
Short Sale vs Deed in Lieu Buffalo NY — Which Option Is Better for WNY Homeowners
If your Buffalo or WNY home is worth less than you owe and you can’t make the payments, you have two lender-negotiated exit paths: a short sale or a deed in lieu of foreclosure. This page breaks down exactly how they differ, when each one makes sense in New York State, and why a cash sale beats both in most situations where any equity exists.
Nickel City Buyers, LLC is not a law firm and we are not attorneys. The information on this page is based on our experience purchasing 300+ homes across Buffalo and Western New York since 2013 — it is provided for general educational purposes only and does not constitute legal advice. Every foreclosure situation is unique. Before making any decisions about your home, we strongly encourage you to consult a licensed New York State real estate attorney or contact a free HUD-approved housing counselor. Free legal aid for Erie and Niagara County homeowners is available through Neighborhood Legal Services (nls.org) and Housing Help NY (housinghelpny.org). If you have an urgent situation — a Sheriff Sale date in Erie County at 92 Franklin St or Niagara County at 175 Hawley St — call us at (716) 557-7005 and we will give you an honest assessment of your options immediately.
vs. Cash Sale — Complete Comparison
Every factor that matters for Buffalo and WNY homeowners, side by side. Including what happens if you can sell to a cash buyer instead.
| Factor | 🔵 Short Sale | 🟡 Deed in Lieu | ⭐ Cash Sale — NCB |
|---|---|---|---|
| How It Works | Lender approves sale for less than owed to a third-party buyer | You sign deed to lender — bank cancels mortgage and takes property | We buy directly — close in days, all payoffs handled |
| Credit Score Impact | 80–150 point drop | 200–250 point drop | Minimal — standard sale |
| Credit Report Duration | 12–24 months typically | Up to 7 years | No foreclosure notation |
| Equity Received | Zero — lender takes all proceeds | Zero — bank keeps everything | Yes — above payoff at closing |
| Lender Approval Required | Yes — 60–120 day process | Yes — often denied | No — independent of lender |
| Other Liens Allowed | Complicated — each must approve | No — usually disqualifies you | Yes — all paid at closing |
| Deficiency Judgment Risk (NY) | Often forgiven in approval | Risk — written waiver required | Eliminated — full payoff |
| 90-Day Listing Requirement | Not required — but process takes 60–120 days | Yes — most NY lenders require it | Not applicable — direct sale |
| Timeline to Close | 60–120+ days | 90–180+ days | 7–21 days |
| Tax Consequences | Possible 1099-C on forgiven debt | Possible 1099-C on forgiven debt | Standard sale — consult CPA |
| Public Court Record | No — private transaction | No — private transaction | No — private transaction |
| Next Mortgage Wait | 2–4 years for conventional | 4 years for conventional | Fastest path to rebuild |
| Best For | ✓ Underwater — no other liens — time to negotiate | ⚠️ Last resort — lender reluctant | ✅ Any equity — fastest exit |
Works in New York State
A short sale occurs when your lender agrees to release their mortgage lien on your property so you can sell it for less than what you owe. The lender takes all proceeds from the sale — you receive nothing — but the remaining deficiency is often forgiven as part of the short sale agreement.
You still need to find a buyer willing to purchase the property at a price the bank will accept. The lender’s loss mitigation department reviews the buyer’s offer and can accept, reject, or counter it — a process that typically takes 60–120 days in New York.
Short sales work best when you’re significantly underwater, have no other liens, and have 60–120 days before foreclosure proceedings reach the Sheriff Sale stage.
- You owe significantly more than the home is worth
- You have time — at least 60–90 days before auction
- No other liens beyond the primary mortgage
- Lender is willing to engage — not all are
- Less credit damage than deed in lieu or foreclosure
A deed in lieu of foreclosure is when you sign the property deed directly to the bank in exchange for mortgage cancellation. No buyer needed — you simply hand the property to the lender. It sounds cleaner and simpler than a short sale, but lenders are often reluctant to approve it because they inherit the responsibility and cost of selling the property themselves.
New York lenders typically require you to have first listed the property for at least 90 days before considering a deed in lieu. Any other liens — back taxes, second mortgages, municipal violations — will usually result in rejection.
The credit impact of a deed in lieu is similar to a completed foreclosure — up to 7 years on your credit report and a 4-year wait to qualify for a conventional mortgage again.
- No other liens on the property whatsoever
- Lender is willing to approve — not always the case
- You’ve already attempted to sell for 90+ days
- Short sale has been exhausted or rejected
- Written deficiency waiver is negotiated and signed
For Your Situation?
Use this guide to identify which path fits your specific situation in Buffalo or WNY.
- You owe more than the home is currently worth in Buffalo’s market
- You have 60–120 days before the Sheriff Sale date
- Your lender has expressed willingness to engage
- You have no second mortgages or liens beyond the primary
- You want less credit damage than deed in lieu
- You’ve consulted a NYS foreclosure attorney or housing counselor
- Short sale was attempted and rejected by the lender
- No other liens exist on the property
- You’ve listed the home for 90+ days with no acceptable offer
- Your lender indicates they’d rather take the property back
- You have a written deficiency waiver negotiated in advance
- You’ve reviewed tax consequences with a CPA
- Multiple liens exist — back taxes, second mortgage, OBI violations
- Sheriff Sale is within 30 days — not enough time for either process
- Lender is unresponsive or unwilling to engage loss mitigation
- Property has title issues that cloud ownership
- In these situations a cash sale may still be possible — call us
- Your home has any equity above total payoff amount
- You want to close in days — not months
- You have back taxes, liens, or violations we can pay at closing
- You want less credit damage and a clean exit
- You want any remaining equity in your pocket — not the bank’s
- Call (716) 557-7005 — 10-minute assessment, no obligation
The One Thing Most
Buffalo Homeowners Miss
Short sale and deed in lieu are both framed as exits for homeowners who are underwater — who owe more than the home is worth. But Buffalo and WNY property values have increased significantly since 2013. Many homeowners who believe they’re too deep to have equity actually aren’t — especially when they account for years of principal payments alongside market appreciation.
“Before you begin a 120-day short sale negotiation, find out what your property is actually worth today. You may be surprised — and a cash sale may put real money in your pocket.”
Both short sale and deed in lieu result in zero equity for you. The lender takes everything. A cash sale to Nickel City Buyers — if equity exists above your payoff — pays you the difference at closing. In a market where Buffalo home values have appreciated, that difference can be meaningful.
Even if you are underwater, a short sale is generally preferable to deed in lieu for most Buffalo homeowners — less credit damage, lenders are sometimes more willing to approve it, and the deficiency is more commonly forgiven as part of the approval. Our dedicated deed in lieu page covers those specifics in full.
Before you decide anything — call (716) 557-7005. Nickel City Buyers has purchased 300+ homes in WNY since 2013. A single honest conversation will tell you whether a cash sale is possible and whether it’s better than either negotiated exit path. No obligation. No cost. 10 minutes.
Short Sale vs Deed in Lieu —
Buffalo NY FAQ
Which is better for credit — short sale or deed in lieu?
A short sale is generally better for your credit than a deed in lieu of foreclosure. A short sale typically results in an 80–150 point credit score drop and the notation often clears within 12–24 months. A deed in lieu results in a 200–250 point drop similar to a completed foreclosure and can remain on your report for up to 7 years. The conventional mortgage waiting period after a deed in lieu is generally 4 years versus 2–4 years after a short sale. If you must choose between the two, a short sale is typically the credit-friendlier option for Buffalo and WNY homeowners.
Can I do a short sale or deed in lieu if I have other liens in Erie County?
A deed in lieu is nearly impossible if other liens exist — most New York lenders require a clean title with no other encumbrances before accepting a deed in lieu. A short sale is more flexible but still complicated — each additional lienholder (Erie County for back taxes, a second mortgage lender, the City of Buffalo for code violations) must separately agree to release their lien as part of the short sale transaction. This adds time and complexity. A cash sale to Nickel City Buyers pays all liens simultaneously at closing from the sale proceeds — no separate negotiations required.
Do I need an attorney for a short sale or deed in lieu in New York?
You are not legally required to have an attorney, but it is strongly recommended for both. New York State short sale and deed in lieu negotiations involve lender loss mitigation departments, deficiency waivers, title searches, and potential tax consequences. A real estate attorney or foreclosure defense attorney can negotiate deficiency language, ensure the paperwork protects you, and identify issues before you sign anything. Free legal aid is available through Neighborhood Legal Services at nls.org for qualifying Erie and Niagara County homeowners.
What is a deficiency judgment and how does it affect my short sale or deed in lieu in NY?
A deficiency is the balance remaining after your property sells for less than you owe. If your Buffalo home sells for $120,000 in a short sale but you owed $150,000, the $30,000 deficiency could be subject to a lawsuit from the lender. New York State allows deficiency judgments after both short sales and deeds in lieu. For a short sale, deficiency forgiveness is sometimes negotiated as part of lender approval. For a deed in lieu, you must negotiate a written deficiency waiver before signing. Never proceed with either option without confirming the deficiency status in writing from your lender.
How long does a short sale take in New York?
A short sale in New York typically takes 60–120 days from the time you submit the short sale package to the lender’s loss mitigation department to receiving a decision. If approved, closing follows — usually within 30 days of approval. However some lenders take longer, and the process can stretch to 6 months or more. If a Sheriff Sale date is approaching in Erie County (92 Franklin St, Buffalo) or Niagara County (175 Hawley St, Lockport), there may not be sufficient time to complete a short sale. A cash sale to Nickel City Buyers closes in 7–21 days — compare that to the short sale timeline before you decide.
Can Nickel City Buyers help me avoid both short sale and deed in lieu?
In most cases where any equity exists, yes. If your Buffalo or WNY property is worth more than your total payoff — including all back taxes, lien amounts, and foreclosure costs added to the balance — a cash sale closes faster than either negotiated option, puts equity in your pocket instead of the bank’s, and results in less credit damage. Call (716) 557-7005 for a free 10-minute assessment. We’ll give you an honest answer immediately.
Nickel City Buyers — Short Sale vs Deed in Lieu — Cash Home Buyers Buffalo & WNY Since 2013
Nickel City Buyers, LLC is a cash home buying company serving Buffalo and Western New York. We are not attorneys and this page is not legal advice. For legal counsel consult a NYS real estate attorney or nls.org for free legal aid. Located at 3842 Harlem Rd STE 400-339, Cheektowaga, NY 14215. Phone: (716) 557-7005. Website: nickelcitybuyers.com. We serve Buffalo, Cheektowaga, Amherst, Tonawanda, Lackawanna, West Seneca, Hamburg, Orchard Park, Lancaster, Depew, Kenmore, Williamsville, East Aurora, Clarence, Akron, Grand Island, Niagara Falls, Lockport, North Tonawanda, Lewiston, Youngstown, Wheatfield, Pendleton, Newfane, and all of Erie and Niagara County. A+ BBB rating. 5.0 stars on Google. 300+ homes purchased since 2013. All situations → | NY foreclosure help: housinghelpny.org
Before You Negotiate
With Your Lender —
Talk to Us First.
A cash sale may put equity in your pocket instead of the bank’s — and close in a fraction of the time. 10-minute honest assessment. No obligation. No pressure.