Short Sale Your Home Before You Consider Foreclosure

1. A short sale does negatively affect your credit, it isn't nearly as devastating as a foreclosure. Depending on how many mortgage payments are late, after a short sale, you should be able to purchase a home again in about 2 years. After a foreclosure, credit experts agree that most people wont be able to buy another home for 5 or more years.
2. In Florida, foreclosure is carried out through the judicial process...the lender literally sues you to take the property back. This can take a year or more. Short sales, by contrast, is a "win-win" situation with the lender to sell the property in a relatively short period of time.
3. In foreclosure, you have few options and the bank may seek a deficiency judgment. After they sue you for the home, they have years to file suit for some or all of the deficiency suffered by them. This might include not only the direct loss, but legal fees, holding costs, commissions, asset manager fees, etc. Short Sales offer more control for you. An attorney, if needed, can often negotiate away any deficiency judgment with the lender.
4. Short Sales are generally in the best interest of the lender because with over 2 million foreclosures facing lenders nationwide, the costs are staggering and this effects their credit rating and the ability to loan out any more money. . The costs include attorney fees, repairs, utilities, property taxes, asset manager fees, and deep discounts to get the property sold. This no-performing asset for over a year, plus the costs, can easily total 50% or more of the loan amount. By contrast, short sales are quicker and cheaper for the lender.Also the homes are in much better condition in a short sale, resulting in a higher sales price.
5. There can be significant tax consequences to both foreclosures and short sales, so please contact a good tax professional or call us for a referral.