Should I Short Sale In Lieu Of Foreclosure?

The question of whether to short sale a home in Charlotte, NC. or just give it back to the bank has come under a lot of scrutiny over the time. I talk to a lot of families that are weighing that issue on a daily basis...What shocks me is that attorney's they initially consult tell them that a short sale is "not worth it and the Real Estate agent is the only one making money". I do not practice law nor give any legal advice when ti comes to a short sale or a foreclosure. But there are certain facts that attorney's leave out when discussing the difference between short sales and foreclosures. First, the impact on your credit has shown to not be as dramatic on a short sale as a foreclosure. Your credit is going to take a hit in regards to your credit score. but the impact on your score has proved to be less when you short sale a home than foreclose on one. Second, this is the one that always gets me. In order to qualify for a mortgage again the rule of thumb (this could change in the future) is that you have to wait SEVEN YEARS after a foreclosure to qualify for a government backed loan (FHA, USDA, OR VA type of loan). On a short sale I have lenders I work with that will approve someone with sufficient credit TWO YEARS after a short sale. Third, you can stay in the house and live there during a short sale all the way up to the closing on the house...Chances are that if you are in danger of losing your house you would like to have some control over when you leave the house versus the bank telling you to be out on a certain day. Fourth, despite popular media reports the banks do not want the houses back in foreclosure; they rather you try to sell them in a short sale and are more willing to work with you to get them sold that way. The additional costs associated with foreclosure and the carrying costs of maintaining the house during the foreclosure process and afterward has gotten to be extremely expensive for banks. I recently had a family that called me about listing their home. They offered the home back to the bank and the bank asked them to short sale the house instead of giving it back to them. They told him they have to many now and would prefer to work with him to get it sold rather than take the home back. A lot depends on your situation. however; find the right Realtor and have that Realtor explain the process and how they work with the bank and what is required out of you....if you plan on wanting to buy a home sooner rather than later a short sale is definitely more beneficial. Also with so many things now tied to your credit the less impact can have other financial implications on you. So, is a short sale more beneficial than a foreclosure? probably if done right...... Dave diCecco Realtor/Broker www.davedicecco.com