I have heard recently in the news that a short sale is just as damaging as a foreclosure for homeowners choosing this option this is just simply not true. Short sales provide an opportunity for someone to purchase another house in the near future and not have to choose bankruptcy as an alternative.
What is a short sale? A short sale is when the bank accepts less than what is owed on a property as full payoff. This is usually performed by a 3rd party investor who is interested in buying the home but is looking for a discount to gain equity from the purchase.
The suggestion that a short sale is just as harmful as a foreclosure is ludicrous. If you are unfortunately involved in a foreclosure you now face the following obstacles before you can obtain another home.
1) Do to current restrictions from lenders you will not be eligible to obtain a new loan on a home for at least 5 years.
2) You may be sued for the difference between what the house is sold for and what you owe on the home.
3) Your credit will be destroyed
4) Chapter 13 or 7 Bankruptcy and all the stipulations that go along with that.
5) With a foreclosure on your record you will be a big risk in the future for lenders.
What opportunities does a short sale offer as opposed to foreclosure?
1) You can obtain a new loan in as little as 2 years as opposed to 5.
2) Deficient amount owed can be negotiated out by the short sale specialist meaning you will owe nothing back to the bank. ( the bank you absorbs the difference of what you owe vs. what the property is worth.)
3) Your credit although damaged will not be hit nearly as bad as with a foreclosure.
4) Avoid bankruptcy.
5) No foreclosure tagged on to your credit history.
Short sales are also great opportunities for rookie investors to grab equity in properties.
I have been investing for 11 years and want to help people learn how to create extra income and residual income using real estate.
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