Special offer

What is the difference between a short sale and a foreclosure?

Real Estate Agent with RE/MAX Distinguished Homes & Properties 10301205363

What is the difference between a short sale and a foreclosure?


Unfortunately in these times, one out of every 45 home are being served with a foreclosure filing.  I have spoken with many home owners that are facing foreclosure, and the question often comes up; what is better for me?  should I do a short sale or just let the bank foreclose on my property?

While this is a difficult position to be in, and most people wish to keep their homes; the decision between short sale and foreclosure is like deciding between a rock and a hard place.  Obviously the best choice is to try and keep your home, but when that is no longer looks like an option, a tough decision must be made.

The best thing to do is to line up all the facts and understand the differences between letting foreclosure happen or being pro-active and initiating a short sale.


Here are the reasons to Avoid Foreclosure

1.  A short sale brings closure to the situation.  Many sellers think once the foreclosure is completed, and the bank takes back the property the problem is over.  In fact this is false, the foreclusure stays on your credit report, and you still owe the amount you were being sued for.  It does not go away.  With a short sale, you are settling your account with the bank and you do not have to worry about repaying them in the future.

2.  Your credit score will be automatically be lowered by over 300 points.  Of all the things that you can do to negitavley affect your credit score, foreclosure ranks at the very top of that list.

3.  You may not be able to help a friend or relative co-sign in the future.  Think about a son or daughter who may need your help in co-signing on a car or an apartment in the future, your foreclosure will take this option right off the table.

4.  You will always have to disclose that you had a foreclosure on all mortgage applications and on most employment applications.  Although you can fix your credit as time passes, many employment applications specifically ask if you have ever had a foreclosure.

5.  In a foreclosure, the bank will probably seek a deficiency judgment against you, and attempt to collect money from you even after they have taken the property.  Unlike a short sale, where you negotiate with the bank to not owe them anything after the closing, in a foreclosure, the letters, phone calls and debt may still continue.

6.  A foreclosure is one thing on your credit report that is almost impossible to "repair."

7.  Many employers run credit checks on potential new employees and a foreclosure is a big red flag against you.  Finding a new job may be compromised.

8.  If you hold a government job, or your job requires you to have security clearance, your employment may be jeopardized by a foreclosure.


A foreclosure can be stressful and may feel over bearing at times.  It is important to know that although these things take time, they do pass.  One day it will all be over, one day you may be want to buy another home.  One day, you will be out of this situation you are in now.  The best thing to do, is to minimize the damage done.  Preventing a foreclosure from happening will put you on the fastest road to recovery.

Posted by

Walter Sarmiento

The Sarmiento Sales Team

2300 Eastchester Rd, Bronx, NY 10469

Direct: (718)679-0511

     Need to buy or sell your home?  Anywhere in the WORLD?  I work with an incredible network of agents, and can refer you to the best one in your market.  Get the job done right!

Bronx & Westchester Real Estate Search

by Walter Sarmiento