Short Sale vs. Foreclosure

Why do a short sale instead of a foreclosure?

Foreclosure Short Sale
Deficiency Grows Deficiency is Finite
3-5 Year Impact on Credit 18-24 month Impact on Credit
Non Negotiable Totally Negotiable




Here's Why

With a foreclosure you are dealing with an ever growing deficiency...the definiciency increases as the bank continues to add taxes, maintenance fees such as winterization, mowing and plowing, realtor fees, etc to the amount that the homeowner owes the bank from the time they take the property back until the time they dispose of the property so a deficiency of 50k could increase to two or three times that amount. A short sale results in a finite amount so the deficiency of 50k stays at 50k and does not grow or increase.

A short sale has an 18 to 24 month impact on your credit as opposed to a 3-5year impact with a foreclosure...

Also, the drop in your credit score is double with a foreclosure as it would be with a short sale...

Unfortunately, many people think that they can just walk away from a foreclosure and be done with it once they take back the house...but that is not the case. With a foreclosure its like the homeowner is a boxer up against the ropes they just have to take what the bank keeps dishing out and they don't have anything to fight with. The bank can dictate how they are going to handle the deficiency they can give the homeowner a deficiency judgement and the only way for them to get rid of it is to pay it in full with interest over time or declare bankruptcy. With a short sale the homeowner is in control, everything is negotiable both the price and the terms can be negotiated including how the bank handles the deficiency.

It is definitely in the homeowners best interest to entertain a short sale instead of just allowiing the bank to foreclose.


Cynthia Brower

Cynthia Brower

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