Short Sale vs. Foreclosure

Just three years ago, the terms short sale and foreclosure were almost non-existent in the real estate market.  Today, these two solutions for troubled homeowners are everyday terms that describe everyday occurrences.  Today’s real estate market is truly unique in that the slump is national in scope and affects homeowners at every income level.


The fact is that more than 50 percent of today’s transactions are distressed sales.  One in five homeowners would be facing a short sale if they were forced to sell at this time.  One in every seven residences has experienced some form of mortgage delinquency in the past twelve months.  More than one million homes will be re-possessed by the end of 2010.  Worse yet, more than nine million homes will receive foreclosure notices by the end of 2012.


Some homeowners are making strategic decisions to allow foreclosure. Many others are entering into short sales.  The weight of a foreclosure is hard to get out from beneath.  Today, sellers can have the credit damage of a short sale behind them in two years.  Distressed homeowners that opt to absorb the short sale are in much better credit positions than those that choose foreclosure.


With the assistance that is on the table from HUD and organizations like the Neighborhood Assistance Corporation of America, homeowners have choices.  It has never been easier to favorably modify a loan.


If modification will not work, concluding a short sale is easier than ever.  The National Association of Realtors has made short sale instruction an integral part of the real estate agent’s training.  The progress in putting short sales together has been remarkable.  When distressed sellers really know their options, foreclosure is the resort of last choice.


The good news for the short seller is that lenders are more receptive to short sales than in the past.  These lenders are not in the real estate management business and for the lender foreclosure is far more expensive than a short sale.  Distressed homeowners who are unable to procure a modification should be aggressive about finding a short sale buyer.  Take the emotion away from the transaction and focus on the future.  Conclude the short sale today and in two years the seller will be back in the marketplace.    

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