What's the real benefit of short sale versus foreclosure?

Like all of you, I'm a big proponent of short sale over foreclosure, not merely for my livelihood (but that counts) but also because I think it's much more responsible than simply living rent-free until you're kicked out.


That aside, I have always used the additional benefit of a less damaged credit score with a short sale over a foreclosure, but then recently, I had some lenders come speak to my real estate class, and they noted that a short sale is just as detrimental on the credit as a foreclosure. This left me flabbergasted.

I am sure I was told it was much easier to get a loan after a short sale versus a foreclosure. And I understand that how many missed payments DO come in to play when we're discussing credit scores.


With all that said, what are the REAL benefits that all of you are using to help encourage short sales?

I want to make sure I am conveying actual benefits to my prospective clients.

 

Thank you!

Tamara

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Permalink Reply by Rita Legan CDPE (440) 227-4461 on December 5, 2011 at 4:55pm

I found this article very helpful in my discussions with Short Sale Seller's to help in understanding the future impact of a short sale versus foreclosure. 

Permalink Reply by Gary Waters on December 6, 2011 at 2:11am

Seems pretty obvious over the long term - less long tern damage, quicker recovery of credit worthiness.  I can see no reason though to do a short sale if the home owner is going through a bankruptcy any way. Sometimes the best option could be a total bankruptcy - only my opinion as I am no lawyer!

Permalink Reply by Jim West on December 6, 2011 at 4:31am

Gary, here in Ohio, which is a judicial state, it is still in the best interest of the homeowner to short sale their home, even if they do file bankruptcy. Since the mortgage company has placed a lien on the property, the only way they can get the property is through a foreclosure and now the homeowner has a foreclosure as well as a bankruptcy on their credit report. That makes for 2 black eyes, when they coiuld have had only one. Also, if the homewowner is in a sensitive security position at work, they could be relocated to a different position due to the foreclosure sale, or worse, fired.

My biggest source of short sale business is bankruptcy attorneys. I have spoken at their monthly luncheon a couple of times and have had appointments with them discussing short sales & HAFA amd now many of them send me business on a consistent since the word has gotten out that I know what I am doing.

Permalink Reply by Bryant Tutas on January 22, 2012 at 2:05am

xx

Permalink Reply by Patti Lyles on January 22, 2012 at 4:28am

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