There is a lot of confusion in the marketplace over the difference between a short sale and a foreclosure. A short sale may show up on your credit report with late payment status and clear up in about 2 years. A foreclosure impacts your credit rating for the next 7 to 10 years.
Obviously, the short sale is the preferred method in saving your credit rating. When considering either, it is important to seek legal and or tax advice prior to entering into a listing agreement.
Short sales require the sale of the home, where the lender agrees to accept payment less than the full amount owed on the home in order to sell the property. If the lender agrees, the home is placed on the market while yet in pre foreclosure status. The pre foreclosure status is approximately 90 days before home is auctioned unless otherwise negotiated with the lender.
Sellers must act quickly to avoid foreclosure.
If the seller decides that the short sale is in their best interest, they should have their Realtor contact the lender immediately. The Realtor will provide the lender short sale documents along with a letter of hardship, describing the homeowner's current financial position explaining why the homeowner is unable to make mortgage payments. The Realtor will then negotiate price and terms of the short sale acting as the liaison between home owner and lender. All lenders treat each situation differently and make decisions according to their specific circumstances.
Working with the lender requires patience and persistence. The seller, buyer and Realtor are all at the mercy of the lender. It is imperative that the homeowner stay focused on the end result. Short sales are usually a long, tedious process that requires a great deal of the Realtor's time and resources. If you are considering the short sale of your home, please call us for details on your specific situation. We are here to help!
In health,
Brian & Cherie
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