What's the Better Option? Short Sales or Foreclosure?
Short sales and pre foreclosures are two home types that constitute a growing subset of bargain homes which includes properties often called"distressed" and "auction" homes.
Mostly with Americans facing the very real threat of foreclosure, the majority is looking for ways to cure it. One option, plus a topic that has garnered an important number of industry interest, is actually areal estate short sale. Normally reserved for stocks and other finance-related transactions, short sales are becoming an increasingly popular, and common, foreclosure avoidance tactic for homeowners.
To help understand how a shorter sale would relate to, or differ from, foreclosures, it may be beneficial to indicate that short sales can be referred to as"pre-foreclosure sales" which, as the name implies, precedes the home being officially repossessed or foreclosed on by its lender. That is, any property is sold much earlier than the months it often takes to reach foreclosure, allowing all parties to advance on from the transaction sooner.
It must be noted that there are still negative ramifications for short sales, even when less damaging compared to those linked to foreclosures and/or bankruptcy. For instance, this short sale homeowner's credit will still be adversely troubled by settling over the lender. Actually, based on an article by Elizabeth Weintraub on About.com, the effects on credit are comparable for short sale and foreclosure and could drop a sellers overall score by as much as 200-300 points. However, short sales do carry less negative effects than foreclosures. Short sale sellers are widely seen as less risky than foreclosed sellers. Case in point, Fannie Mae recently adjusted their guidelines to dictate only a 2 year waiting period for a short sale seller to acquire another primary residence, while they extended the waiting period for foreclosures to 5 years. Fannie Mae Guidelines
At its best, a short sale could be a win-win for both parties. For any seller, a short sale supplies the opportunity to avoid foreclosure and the dreaded implications that the foreclosure brings, in addition to being able to get back to owning a home sooner; alternately, the lender receives most of the worth of the money sooner, and avoids incurring additional legal or carrying costs with regards to foreclosure process plays out, which can occasionally take years. And, frankly, short sales are great alternatives for savvy buyers - but these buyers must not simply be looking for a bargain, but possess the time and skills to negotiate effectively on top of that. See "Buying Short Sales".
The net-net about this topic - short sales do present a better option for distressed sellers than foreclosures. However, it is neither an easy or short process, and sellers should seek thorough legal and tax advice when considering this route.
You can visit Connecticut Real Estate for short sale and foreclosed homes.
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