Foreclosure Vs. Short Sale

By: Julie Jalone

Recently a potential client in Sacramento asked me if there were any advantages to avoiding a foreclosure by using a short sale and requesting their lender to forgive a portion of their mortgage debt.?

Although some credit professionals have a different opinion, most that I have talked with agree a short sale is less damaging to the homeowner's credit.? I have been told a short sale blemish on your credit report will stay about 4-years while a foreclosure will remain a credit burden for 7-years.? If you are going to need a new car or even purchase a home in the foreseeable future this could be a determining factor in getting the loan and, if you do, the interest you will pay.

In my opinion, maybe as important as your credit record, is the personal pride and self-respect that can be maintained by avoiding a foreclosure by using a short sale.? Selling your home with a short sale strategy is no different than any other home sale.? You select the Realtor (you should make sure they have solid short sale experience and have a proven process), you make the marketing decision including price, reductions and other decisions and you negotiate with the buyer, finalizing the contract subject to lender approval of the short sale.??? In other words it looks very much like any other house sale.?

Because of lender negotiations, the process of closing a short sale may take longer than a normal sales transaction but when the lenders agree, the seller moves out and the new buyer moves in. ?In a foreclosures sale, the homeowner is evicted; the home may sit for weeks or even months vacant with no maintenance or upkeep.? Dead plants and brown lawns are the common calling cards for lender owned property.? Eventually a Realtor is hired by the lender and the home is most likely marketed as 'Lender Owned' or 'Foreclosure.'?? This can and often is a humiliating experience for the homeowner

A homeowner who is experiencing financial difficulties, not able to continue to make mortgage payments and owes more on the home than it is worth is a good candidate for using a short sale to avoid foreclosure.? Using a short sale strategy to avoid a foreclosure can be better for your credit report and allow you to exit from a painful experience with your pride and dignity intact.

If you are a home owner and can't continue to make your mortgage payments and your home value has dropped below what you owe, give me a call or talk to a Realtor with successful experience in negotiating with lenders.? You can reach me by email at julie@jalone.com or call me at 916 276-6883.

Foreclosures
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