What’s the Advantage Of A Short Sale Over a Foreclosure?

See My Comments About The Market In Newsday – June 29, 2010

If you’re in a situation where you’re faced with foreclosure, you may be wondering what the advantage of a short sale over a foreclosure is exactly. Right Now, lenders and loan servicing companies are cooperating much more with borrowers to get short sales completed and get the headaches and expense of foreclosures off their backs. Incentives like the HAFA program offered by the US Treasury for TARP banks is one major reason and of course, it has to do with money (banks that expedite short sale transactions get money as in incentive to cooperate with borrowers).

Foreclosure or Short Sale?
While government programs like HAFA may not be having as great an impact as people hoped, it is definitely something that may help homeowners and their real estate agents complete a successful short sale.

One main component to seeing if you qualify for the HAFA program is to know if your lender(s) accepted TARP funds. If so, then HAFA may be a viable option. Secondly, with any short sale, in most cases, some form of financial hardship must exist and there are several categories that certainly impact finances such as divorce, death, or loss of business or employment.

But what’s the advantage of a short sale over a foreclosure? Simple, you avoid foreclosure. A foreclosure on your credit record is devastating and the process of having the bank put up yellow signs in your home as they evict you or you move out, can be very embarrassing. With a short sale, there is no yellow sign that says “bank owned”, rather there’s a real estate for sale sign that says Coldwell Banker and has my name on it.

A short sale is a little more discreet. Of course, once the home is on the Multiple Listing Service, then Realtors and their buyers will know you’re selling the home via a short sale, but it’s better than having as public a default as a foreclosure (which is also placed in several newspapers to announce public notice of foreclosure).

A short sale also will give you, the owner, more options for moving on faster in your life. A short sale demonstrates to creditors that you worked with your lender(s) responsibly rather than just walked away and let your credit and a home go down the drain.

Short sales help communities continue to stay afloat and will help home values remain stable as well. I guarantee that all your neighbors will welcome a short sale over a public foreclosure. So a short sale is better for the community and your neighbors.

Now a short sale transaction is definitely more work than just allowing your home to be foreclosed on. There’s paperwork to fill out and there’s a home selling process and negotiating with your lender(s) that takes time and patience. But in the long run, a few years from the date of you closing this chapter in your life, when you can afford a new home and have the credit worthiness to start over again, you will know the greatest advantage of a short sale over a foreclosure is, you can move on with your life much faster.

Should you have any questions about how I can help you sell your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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