When you are struggling financially it is hard to know where to go. Often times you feel helpless and want to just give up. That is completely understandable! I know that feeling! I have been there. If you are considering walking away from your property think about these 5 reasons to chose a short sale over a foreclosure.
- Your credit will be affected more with a foreclosure than with a short sale.
Unfortunately, either way your credit will take a hit. Both foreclosures and short sales will show on your report for 7 years. A short sale will be listed as “settled for less than the full amount due” on your credit report. A foreclosure will be listed as a foreclosure. The waiting time to purchase a home after a short sale can be as little as three years while a foreclosure can often be up to seven years.
2. You may be eligible for incentives to help with relocation.
Some lenders do not give these options but many do. I find that around 75% of my clients receive incentives. The wonderful thing about these incentives is that sometimes they can also be used to pay off liens that need to be cleared before the sale of the property. It is important to remember that in order to quality for these incentives you need to still be living in the home.
3. You have more time to relocate.
A short sale can give you more time to find a place and move. It is not unusual for it to take over three months. Once a foreclosure notice is filed you will have a set amount of time to be out of your house, usually around a month. If you do have a foreclosure notice, often there is still time to do a short sale.
4. It will most likely give you a fresh start.
In order to sell your property in a short sale, all liens on the property will need to be released. This can be done by paying it off, paying it off with the relocation incentive or re-negotiation of the debt. While there are some exceptions most of the time you will receive a release of liability and will not have a deficiency judgement for the outstanding loan amount.
5. You can avoid the stigma of a foreclosure.
To the outside world a short sale looks like any other real estate transaction. Most short
sales need to be designated as such in the MLS. In the Kansas City area we are required to put it in agent remarks. The agent will see it and might share with their client but the general public will not have knowledge of the the short sale status.
The decision to short sale you home can be an emotional one. It is important to meet with a short sale specialist to get all the facts. Once you have a strong understanding of the process you can make an educated decision.