What's the Difference Between a Short Sale and a Foreclosure?

As a short sale and foreclosure resource certified real estate agent (SFR), there's a lot of training and experience that's involved in becoming certified to handle distressed property situations. During the housing crisis in 2008-09, I can recall many conversations with homeowners who had to make some very difficult decisions due to layoffs or that they were in over their head with mortgage payments and negative equity. We would discuss strategies and timing and the emotions that are involved. Sometimes it's a good idea to bring in a real estate agent like myself when times are starting to get tough. Usually when folks lose a job or there's a divorce in the works, things can go downhill very quick. When tough decisions have to be made, it's not always a good idea to make those decisions when everyone is stressed out and scared. It helps when a professional can calmly ask questions and help people strategize and game plan.

A recent Forbes article dove deep into the differences between a short sale and foreclosure. Click here to view the article in its entirety.

To sum it up for the sake of time, a short sale will take a little longer but you can purchase another home sooner than if you foreclose on a home.Your credit will be impacted by at least 150 points. If you make the decision to stop making payments on a home, then you'll begin going down the path of foreclosure. The banks will work with you and oftentimes they will suggest you try to short sell the home.

If you're worried about your finances going forward, the best advice I can offer is to start reducing your living expenses little by little so it doesn't feel so drastic. I would then put away a little bit from each of your income sources. Once you start living less than your means you will feel better about yourself because you'll see a way out. Once you start too far down the path of debt where you're heavily reliant on credit cards to keep you going with the lifestyle you're currently on, then it becomes impossible to see a better way except to open new lines of credit to pay other stuff off. It's a tough circle to break, but critical to the future of your family.

Chris Whittaker

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