Short Sale vs. Foreclosure

Short Sale vs. Foreclosure: Which is the Better Option?

Losing your home to foreclosure due to an inability to keep up with your monthly mortgage payments is one of life's most unpleasant experiences. It is also an event that keeps on affecting you long after your home is history by devastating your credit score. Regrettably, most people cannot be 100% sure that they will remain safe from foreclosure because they can't foresee the unexpected. Occurrences such as serious illness, a major accident, divorce or job loss can happen to anyone. So it's a good idea to understand the available alternatives should the worst occur.

Of all available options, foreclosure is the worst
The inevitable result of a foreclosure is the lender taking your house. Not only will you lose your house, but the lender can get a judgment against you for the arrearages you owe plus his costs for the foreclosure action. If that isn’t enough, your credit report will be in terminal condition for many years to come, worsening an already bad financial situation and making it very difficult to obtain any other kind of credit. There is no upside to foreclosure. It should be avoided at all costs.

Consider a short sale when foreclosure seems inevitable
A short sale is a popular option for homeowners mired down with financial problems. In this case, you would sell your home for less than what you owe your lender; the biggest problem you will face is getting your lender to agree to a short sale. In many situations, they will not. Experts advise pursuing this option the minute you realize that you are falling behind in your payments and most likely won’t be able to catch up. The longer you wait and the greater the amount you are in arrears, the less likely it becomes that your lender will even be willing to discuss a short sale.

Short sale has disadvantages too
While a short sale will save you from foreclosure, it will also have a negative effect on your credit score, frequently lowering it by as much as 150 points. This can be overcome more quickly than the black mark of a foreclosure, especially if you manage to retain one or two credit cards and keep them current. Perhaps equally distressing, the Internal Revenue Service frequently deemed the difference between the mortgage balance and the amount realized from the short sale to be taxable as income despite the fact that the debtor never saw a dime of it. There is new federal legislation called the Mortgage Forgiveness Debt Relief Act 0f 2007 that just went into effect on January 1st, 2008. The new act essentially eliminates this problem.

Almost any option is better than foreclosure
Simply stated, do everything you can before foreclosure occurs and do it as quickly as humanly possible. Don’t sit back and keep thinking, “What can I do?” Instead, consider that short sale and check with your lender before your options become more limited.

The One Best Tip I Can Give You: Don’t Do This Alone
Having someone who could work on my behalf was incredible. Facing foreclosure is a scary thing, I know, I was about a month away from losing my home before I got my short sale done.

Don’t just get any real estate agent to help you! Sunny Coast Realty makes all the difference. We knoe who to talk to, when to talk to them, and how to handle all the paperwork to get the deal done.

You Need An Experienced Short Sale Agent!

Farah, Just wanted to drop a note to say Thank-you for all your hard work and follow-up. This entire ordeal was very stressful for my wife and I and you did a great job releaving most of that stress. You really cared about our bottom line & that for us was selling our home ASAP & working with our Lenders to alleviate the stress they were putting on us every day. Well done!

Sara G., Chula Vista

Thanks Farah! I am so appreciative of all the work you and your team did. It was such a relief for me and my family from the day we met you. You handled everything professionally form day one. It is very much appreciated!! All the best to both of you and your husband and if I ever run into anyone in a similiar situation that I was in, I will definately refer both of you! Thanks again and take care.

Mustafa B., San Diego

Thank you very much for all you did to help us avoid foreclosure on our home. We had our home on the market for over 3 months with another Realtor who was really clueless about our needs. You really cared about our bottom line & that for us was selling our home ASAP & working with our Lenders to alleviate the stress they were putting on us every day. Well done!

Jerry C., San Diego

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