Short Sale VS Foreclosure – Which should I do in Jupiter Florida?

by Rodney Forbes on November 2, 2012

West Palm Beach Short Sale RealtorGetting fired from your job usually means getting cut from the main source of income, and one of the first things to be sidelined when this occurs are mortgage payments. Paying for a house to live in might appear to be a little costly especially if you can just opt to rent an apartment. While it is easier to just walk away from your monthly mortgage payments and let the bank take your home, you might want to contemplate a short sale. So, what is the difference in the benefits of a short sale VS a foreclosure?

Benefits of a Foreclosure – the art of walking away

Foreclosure is the easy way out. Basically, foreclosure is simply walking away from your property until the bank decides to foreclose on it. This is a little known fact, but foreclosure could possibly be the worst thing that you can do. Think it over – after the bank forces you to turn over your property, they get to clean it up, put it on sale for a cheaper price and whoever gets the property will either: (a) renovate it and try to sell it at a very high premium; (b) sell it as is and the seller can still get a respectable profit out of it or; (c) whomever gets the property can just live in it, still getting the better end of the deal because of the bargain price that he or she bought it for.

Foreclosed properties can sell pretty quickly as compared to a short sale. While this sounds pretty good on paper, keep in mind that it is the bank that already owns the foreclosed property, they are the ones who profit the most from a fast transaction, so please, take this time to read further into avoiding or preventing foreclosure.

Also, while it may sound really easy to just walk away from your property and let the bank acquire it, you may want to consider the following repercussions:

• It shows up on your credit records – taking care of your credit rating and record should by far be more critical than anything else you should consider before taking the easy way out. It is noted that your credit rating can go to as low as 160 to 105 points depending on the manner of foreclosure or on your credit history. This is especially important to consider if you have an active business or you are looking into bank loans for business or other concerns. A foreclosure can sometimes be read as a severe negligence on the part of the person. It is crucial to note that banks do not consider any kind of personal issues that you are enduring at the time of foreclosure: it’s either you make your payments on time or you don’t.

• A foreclosure record can leave a lasting impression – records of a previously foreclosed property may show up on your personal credit for up to 7 years. That is a lot of time to consider especially if you want to apply for something that is bank or credit related in the next seven years. While most people will think that they wouldn’t mind this kind of record because they are not planning on doing anything bank related, consider this: any type of foreclosed property records can severely affect your job applications. Why? Some employers look into your credit background to see if you are responsible in your credit, and a foreclosure blemish may cause them to conclude that you are irresponsible if you have a foreclosure on your record.

• Waiting period before you can buy – records of foreclosure can affect even the period when you can purchase your next home. Typically, banks choose more responsible and trustworthy people without any form of negative records to approve a home loan application. The current waiting timeframe for anybody to be granted by a bank or an institution to mortgage a home again is usually 5 years. Also, do you think a bank will let you purchase a home if records show that you already failed in maintaining a previous mortgage?

• It affects your loan applications – similar to most of the reasons above: why would you think any bank will permit a loan to you if your records reveal that you had trouble paying for one before? Even if the intention might be very different from that of a home purchase, like a school loan, car loan or business loan, it is still the same thing.

• You get evicted immediately – unlike if you put your home up for a short sale; eviction usually is very quick if your property is being foreclosed on. Generally, a notice period of 30 days is given to the person with a foreclosed property, but any other extensions might not be considered by the lending institution.

Benefits of a Short-sale – doing something about it

West Palm Beach Short Sale RealtorA short sale home specialist defines a short-sale as the lesser of the two evils. If you are concerned on how to Short Sale a home, then the first thing you need to be aware of is it allows you a lot of options that foreclosure doesn’t give you, such as:

• Control over the price – in opposition to foreclosures, short-sales allow you to control the price of the sale because you still altogether own your home as the bank has not seized ownership of it yet. Granted, short-sale prices are still a lot lower at market value than the property value, you’d much rather be selling at a loss than letting the bank do all the selling for you. Even though the bank must have the final say so in a short sale offer, prices typically are higher than foreclosed homes. This will do your neighbors a favor by helping to preserve community property values.

• Leave when you want to leave – opting a short sale lets you stay in your home longer, as the bank will give you notice when the short sale deal is approved for close. A short sale waiting period can last from up to 2 to 3 months.

• A clean slate – while generally your personal credit and bank records are your own responsibility, a short sale does not impact your credit in the same way as a foreclosure. That means you can do a lot of things that you wouldn’t be capable of if you had a foreclosure showing up on your credit. Not only to mention a clean slate, but on top of this and upon a successful completion of your short sale you may qualify for the HAFA Program. A program that could offer up to $ 3,000.00 CASH BACK towards your relocation! A borrower can be eligible to purchase a property in only two years after a foreclosure.

So, which is the better option? A short sale or a foreclosure?

Considering a short sale over foreclosure may be the best option by far. The mere fact that you have control over the price and the time when you can sell your home is a better alternative than being forced to give up your house and being ordered to leave the premises as soon as possible.

While it is ultimately up to the person to select either a short sale or a foreclosure, what is valuable is that options are weighed first and consider how it may affect your ability to buy a home in the future and affect your credit rating. Doing your research is a job well done. Now, your next step is to contact one of our extremely trained Short Sale Specialists, so they can get your short sale on the go and successfully completed!

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

{ 2 comments… read them below or add one }

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