I have written past articles about why you should consider a short sale vs. foreclosure. Lately, I have been on a few short sale appointments where the home sellers feel if they are going to lose their home anyways, why bother with a short sale and just let the bank foreclosure and avoid the hassle.
Short Sale vs. Foreclosure… Why is a short sale better?
I thought it was worth reiterating why a short sale is usually more beneficial to a homeowner than a foreclosure. There are 2 reasons that a short sale is better than a foreclosure:
- Credit Retention- A short sale will typically impact your credit score less than a foreclosure. There are definitely many factors that can effect how your score will be impacted in a short sale…. unfortunately many times there are other credit issues other than just the mortgage. In a short sale, the debt is usually reported as settled. A foreclosure is one of the worst credit marks you can have. Even if you manage to bring your score back up a reported foreclosure will prevent certain types of credit being available to you until it is removed (usually seven years)
- Controlling the deficiency judgment- Whether you do a short sale of a foreclosure, you may have to deal with a deficiency judgment. In the state of Massachusetts a bank has up to two year to file for the deficiency and up to 20 years to collect. They can garnish wages, attach future assets and so on…. In a short sale, many times the right for the bank to pursue a deficiency judgment negotiated right off the table. You do not have that option with a foreclosure. Even if in the short sale the bank retains the right for a deficiency judgment it could be for less than what it would be in a foreclosure. Don’t forget you have to pay all the costs associated with the bank trying to collect the debt.
- Avoiding the stigma to foreclosure– A foreclosure notice and auction results will be reported in your local newspaper. It will be public to anyone who picks up the local newspaper. While a short sale is disclosed it is not quite as public as losing your house to foreclosure.
Don’t give up so easily, what you decide today can impact you for many years to come.
When deciding whether a short sale vs foreclosure is right for you, consult with an a short sale REALTOR, a real estate attorney and/or your accountant. Each professionally may have a different perspective that will be important to your situation.
If you have missed mortgage payments and do not know what your step is call me. I can explain the different options to foreclosure you and help you decide what option is best for you. Of course the call is confidential and of absolutely no obligation. Call Kevin at 978-360-0422
See what a recent client had to say!!
“Thank you so much for helping us sell our home during such trying economic times. Your expertise in short sales and knowledge of the real estate market was instrumental in getting three offers on our home the first day it hit the market! The offer accepted was more than the asking price! You did an outstanding job in going the extra mile when any issue arose.
We can’t thank you enough for giving us your objective opinion numerous times and guiding us through contract negotiations and the closing process. You truly have the client’s best interest at heart from the moment you meet them until the job is done! We HIGHLY recommend you to anyone looking for the “BEST” in the business to sell their home!
Thank you again and we look forward to getting together with you soon!”