Whats the difference between short sales and foreclosures?
A short sale is when the seller accepts less than what is owed on the property and calls it “settled”. All other liens are extinguished. The credit damage can be anywhere from 80 – 125 points depending on other items on the credit report. Generally, someone who has sold a home through a short sale can buy another house in 18-24 months. A foreclosure on the other hand means that a “default” will appear on your credit report, your credit will take a 200 – 300 point hit, and you won’t be able to easily buy a home for about 7 years. With a foreclosure, secondary lein holders can file suit for unpaid balances and can potentially garnish wages. As a homeowner, the best bet is a short sale – it’s much cleaner and you recover more quickly. If you’re a buyer, short sales present a great opportunity for an awesome real estate deal.
