Short Sale

Short Sales, What They mean to Your Credit as a Seller

Short Sales have been made to seem like a really good thing. They help the seller out of a financial bind. They enable a Buyer to get a good deal on a home. They enable Realtors to sell a home that would otherwise not be saleable. A short sale even gets a bad loan off of a bank’s books. This all sounds really good and I believe that it is. There has been something left out of the equation though.

What does this do to the seller’s credit rating? In all of the articles, blogs and press releases that I have read the subject has not come up. Why is this? I am not in a position to say. I can let you know what it does to a seller’s credit. A Short sale shows up as a foreclosure. I have been told by many that a Short sale is not as bad as a foreclosure.

This is true in a moral sense. A short sale allows a home owner to take the high road. To do the job of the banks REO department in helping to dispose of a troubled asset. As for the Sellers ability to get a loan after taking this “High Road”. They will have a foreclosure on their credit report and will have to wait a minimum of 2 years before another lender will talk to them about getting a new home mortgage. If you look you will find that there are some lenders who are making exceptions to this rule.

So why not just let it go to foreclosure? Because we are “Americans” and want to do the right thing! So how about just toughing it out by making the payments even if they hurt? I understand that many people are in positions which make this option impossible. There are many that are going the short sale route as an easy out. You can stop making payments on your home. Live there for free. Why not everyone else is? When and if the home does sell the lien holder will eat the cost of carrying the house during the sale period because the Seller is doing the right thing.

I hope that you have found this blog thought provoking. I applaud those who are genuinely trying to do the right thing by helping the owner of the mortgage loan get out with a smaller loss than they would have realized if the home where to go through a traditional foreclosure. To those of you who are in a genuine bind due to loss of income or value in your home and those who got swindled into a bad loan with increasing payments, I offer my condolences. In this case I would recommend that you talk to a Realtor who specialises in distressed properties. You will find their assistance to be quite valuable.

Sincerely, Jack