Forgive the newbie question, but what benefit does a short sale give the homeowner over a foreclosure?
In either case they are losing the home and according to the article I read their credit score takes the same hit…
http://homebuying.about.com/od/4closureshortsales/qt/060907SScredit.htm
So how would one convince a homeowner it is better to sell to an investor than to just wait for it to foreclose?
Thanks,
Nick
If the SS is approved by the bank and the outstading obligations secured by the property are properly discharged, it is NOT the same as a foreclosure on their credit.
With a successful SS, no foreclosure or collection will appear on your credit. The short sale will show as a “debt paid in full” on your credit report. However, if you were late a few times, it will show the 30-60-90 days late on the account.
Foreclosure stays on your credit as a “collection” and can take as long as 7 years to clear. In most cases, you’ll have to wait 2-3 years before you can get a new home loan again.
THE ARTICLE IS MISLEADING! You CAN do a SS even if you are not late on payments. As long as you can prove a hardship and say that your money will run out in 30-60 or 90 days, you can still submit a SS package. In the best case, you are able to SS the property without ever being late on payments. Then, your credit is intact.
Remember, the credit world is different today then the last time short sales where in vogue. Prove your hardship and you can do a short sale even if you are not late in payments.