How Short Sales Affect Your Credit And Community

Posted by Eric Miller on Wednesday, January 5th, 2011 at 3:10pm.

How Short Sales Affect Your Credit And Community

When facing tough financial times you may end up losing your home. Losing a home is one of the most devastating feelings any human can endure. A home is not just a property, but a place where memories are made, where your family shares the good and the bad times in their lives, and the foundation to a healthy family environment.

Losing a home is the last thing any family wants, but in some instances, you may not have a choice.  It’s vital for you to understand the affects a foreclosure has compared to a short sale on your future, your community, and your credit.

How Short Sales And Foreclosures Affect Your Community

When a home is foreclosed on, the home usually becomes damaged and is under maintained. The damage and reduced maintenance causes the property to lose value. When the home is sold, usually at a reduced price, it will drop the values of similar homes in the surrounding community.

Although you may not like your next door neighbors, avoiding foreclosure will keep your neighbors property values from plummeting.  It’s better for your community to avoid a foreclosure.

As a side note, a short sale allows you to stay in your home until you sell it on your terms. You are allowed avid time to market your home, you are able to negotiate with the buyer, and you get to negotiate with the bank to secure the best terms.

The bank will provide you with 90 days to a year to market your home for sale in the short sale agreement. During this time, they can not foreclose on your property.

Short Sales Reduce The Impact On Your Credit And Future Buying Power

The second reason a short sale is preferred to a foreclosure is the impact on your credit, and the buying power you have in the future.  Your lender will report a short sale three ways:

Paid In Full – paid as agreed
Paid – settled
Paid – unrated
It’s up to your agent/attorney to negotiate the correct terms placed on your credit report. This is why having an experienced short sale negotiator is crucial. A short sale, if you stay current with your payments, may only lower your credit by 50 points depending on other factors. A foreclosure can lower your credit by 200 points or more.

Also, a foreclosure remains public record for 7 years, and remains on your credit history for 7-10 years. Which means, if you're foreclosed on, you won’t be able to purchase another home for at least 7-10 years! With a short sale however, the difference in credit reporting could mean buying another home in just 2-3 years.

A short sale is the better option when faced with a foreclosure. If you are like the millions of Americans facing foreclosure, please don’t hesitate to contact a skilled short sale agent to discuss your options. For more information on the affects of short sales and foreclosures on your credit, please talk to your lender.

About The Author: Lisa Udy is a real estate agent providing expertise for home buyers and sellers interested in purchasing Logan Utah real estate. You can learn more about Logan by researching Logan Utah neighborhoods on Lisa's real estate blog.

 

Eric Miller is an award winning Florida Realtor, salesperson and broker. His website, FortLauderdaleGroup.com provides an up-to-date guide to Fort Lauderdale Condos for sale, and the most complete buyer, seller and investor information for the Fort Lauderdale Real Estate Market.

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