Short Sale Vs. Foreclosure
In 2019 the real estate market in Southern California is correcting and this also means that as a result of that correction we’re going to see more short sales and foreclosures naturally come to the market.
The big question many people have is what’s the difference between short sale and foreclosure?
In this article, we will provide you with information on each option and what you can expect if you’re faced with choosing a short sale or foreclosure.
Since the 2007-2008 financial crisis, there have been many homeowners in the United States who have gone through foreclosure due to a variety of factors including losing their jobs or health challenges which have made it difficult for them to work.
If you’re facing a situation where you’re unable to make your monthly mortgage payment then one thing is going to happen, you’re going to get foreclosed on.
In California, a foreclosure can take upwards of 120 days depending on the timing of the foreclosure notices and if the homeowner goes to court to delay the process or file for bankruptcy.
Foreclosure should always be the last option because, depending on your credit at the time, it can take up to 120 points off your credit score, stay on your credit report for up to 10 years, and you may have to wait 7 years until you’re able to buy another home.
Short Sales Are the Better Option
Instead of letting your home go into foreclosure, you should choose short sale instead.
With a short sale, when you work with a Real Estate agent, we’re going to put together a case that shows your lender why you’re insolvent and why you’re unable to make your payments on time.
This package will help the bank to see why they should approve your short sale and let your home be sold at fair market value.
Once the sale is approved, the bank will take the negative loss on the sale because you’re upside down with your mortgage. Thy will allow you to sell the property while they take care of all of the costs associated with selling the home so you can avoid having a foreclosure on your credit and financial history.
Besides being good for the homeowner, short sales are also better for the banks than foreclosures because with a short sale the home isn’t going to sit vacant for months at a time and potentially lose value.
Yes, there are consequences of short sales because they can stay on the former homeowner’s credit report for 7 years but it’s possible for someone who chooses a short sale to buy a home in as little as 3 years after their short sale has been completed.
Learn More About Short Sale and Foreclosures
To learn more about short sales, foreclosures or Southern California Real Estate, contact the Fred Sed Group by calling us at (800) 921-9231 or connect with us online.