I Am Facing Foreclosure – Should I Bother With Trying To Do A Short Sale?
June 25th, 2008 categories: Short Sales
Given the market conditions in the Phoenix Metro area, buyers, sellers and real estate agents are beginning to develop some opinions about short sales. There is also many buyers, seller and agents who are misinformed and are spreading facts that are simply untrue. As a seller, it is hard to separate fact from fiction.
One of the most common untruths I hear is that a short sale will only drop a credit score 100-150 points while a foreclosure will drop a credit score 200-250 points. The fact is that there is no grading scale for anything in a FICO score. Fico scores are an algorithm that utilize many pieces of information, so credit scores are impacted differently depending on other factors.
Some sellers facing foreclosure have been told that there will not be much difference between a short sale or a foreclosure on their credit score so why go through the “hassle” of trying to do a short sale. In my opinion, a short sale will ALWAYS be better than a foreclosure. If your credit score is impacted in a similar way, the fact that short sale is reported vs. foreclosure is still better. Also, when doing a short sale there is always a chance that the short sale will get reported as something as neutral as “Paid as Agreed”. Yes, you will have mortgage lates, but over time those will roll off.
I have also been told by one lender that they would cooperate with my seller if they continue to pay their mortgage on time. This would be a first in my world as my experience has been that the lenders will not pay attention to those who are current and requesting a short sale…they have too many files to contend with who are in default. I will continue to report on the success of that transaction to see if they do cooperate.
In conclusion, I feel like the landscape of short sales is changing. It has taken months for the lenders to ramp up their loss mitigation departments to handle the amount of defaulting files on their desks. However, for those of us who are in the trenches in this daily, we are feeling some progress is being made. The lenders are feeling the pain of all of the homes they are taking back as REO’s and realizing how deeply they are having to discount those when they come back on the market as an REO sale. We are even perfecting our strategies in dealing with this short sale market and are excited about the opportunity to prevent foreclosure for sellers. Give me a call at 480-201-4185 if you want to discuss your situation.
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