Special offer

Short Sales vs Foreclosures: the Seller

By
Real Estate Agent with Douglas Elliman Real Estate

Short Sales vs Foreclosures: the Seller

 

Real estate professionals are handling an increasing number of distressed properties. Which is a better alternative for the seller – short sale or foreclosure? Here are the advantages of doing a short sale:

It allows a more dignified exit from the home.

In a foreclosure, an official eventually comes to the home and tells the occupants to leave – immediately. In a short sale, the seller knows the closing date and can prepare in advance for the move. In many cases, their neighbors, friends and family needn’t even know of their financial difficulties.

The seller could possibly avoid a deficiency judgment.

In almost all distressed sales, the bank can legally go after the seller for the difference between the loan amount and the selling price (known as a deficiency judgment). Most banks will release the seller from this obligation in a short sale process.

 

A short sale has less of a negative impact on their credit report.

Once a short sale is completed, the sellers begin to clean-up their credit report. The timeline can be much longer as a foreclosure proceeds through the process.

(For more on this go to: Short Sale vs. Foreclosure: A Short Sale Always Wins)

The seller can return to homeownership more quickly.

If a family allows the house to go to foreclosure, it may take 5-7 years to again qualify for a mortgage. In the case of a short sale, the timetable can be 2-4 years.

There is a ticking clock on tax relief.

There is currently legislation, the Mortgage Forgiveness Relief Act of 2007, ensuring that homeowners who received principal reductions or other forms of debt forgiveness on their primary residences do not have to pay taxes on the amount forgiven. This legislation is set to expire at the end of the year.

Posted by

Looking to sell or purchase a home in Central Suffolk County, New York?

Check out all the listings on our website:  www.tjplace.com

 

Toby & John T. Williams                      

Licensed Associate Real Estate Brokers

Certified Real Estate Appraiser

631-363-5434

 

www.tjplace.com            

info@tjplace.com

We are never too busy for your referrals! 

 

CBR   Certified Buyer Representatvie           SFR   short sale & foreclosure resource    

 

     

 

Comments (4)

Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Eighteen Years Experience in Brevard County

I do believe it is pretty evident to all a short sale is a better option than a foreclosure - unless the foreclosure is included in a bankruptcy proceeding.  Of course I am not a lawyer here. This is only my opinion.

Jul 26, 2012 10:25 PM
David Grbich
Realty One Group - www.FindCARealEstate.com - San Juan Capistrano, CA
Orange County Real Estate - 949-500-0484

Great advice - short sales are most often a better outcome than a foreclosure. Regards Dave

Jul 27, 2012 12:16 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Without a doubt, short sale is the better option if the lender agrees.  There are many modification options available also but again, only with voluntary lender participation.  Foreclosure should be the last option in all cases and more likely than not, is due to an uncooperative or obstinate lender.  Very good post contrasting the two options.

Aug 01, 2012 04:00 AM
New York HOME INSPECTOR Inspector Holmes
http://www.linyhomeinspection.com - Farmingville, NY
John Holmes

  Its very unfortunate that the Economy is what it is today, and that these issues are a common topic, but Im glad the HomeOwners have some form of relief.

  Im also glad there are Realtors like Toby and John to help folks through these rough times, and explain options to them

 

                                         INSPECTOR HOLMES HOME INSPECTIONS

                                             Protecting Your Biggest Investment

                                                www.linyhomeinspection.com

Dec 19, 2012 08:03 AM