A Short Sale as an Alternative to Foreclosure

Let's face it, it's not enjoyable going through financial hardships, especially when you are on the edge of losing your home. Try to avoid going down the foreclosure route by entertaining the idea of doing a short sale. Let's face it a short sale is far from hassle-free, however, it is a better alternative than foreclosure.

A short sale is an agreement between you and the lender to sell your home for less than you owe. Although, there is no guarentees that your lender will allow you to avoid foreclosure by going the short sale route, Uncle Sam has put forth regulations intended to encouraging lenders to do so. HAFA or the Home Affordability Foreclosure Alternatives program provides incentives for lenders and borrowers to avoid foreclosures and pursue short sales and deeds in leiu of foreclosures.



Advantages of a Short Sale:
- You can purchase a home much sooner after a short sale rather than a foreclosure. Fannie Mae guidelines help you qualify more a mortgage in as little as 2 years after a short sale rather than the 7 years of a foreclosure-
-No social stigma of "Foreclosure"
-You have more control over the sale, where as in a foreclosure the bank has control.
-Some lenders may not report to credit bureau, though some will report, "Settled"
-Credit scores tend to raise quicker after a short sale.
-Help your communities home values by not having the foreclosure stigma.

Disadvantages of a short sale:
-Your credit score will still take a hit (probably already has since you most likely missed payments before the short sale)
-In some states the lender may be able to come after you for the difference in sales price and mortgage payoff amount. Check with your lender and state laws.


If you are considering a short sale it is best to contact myself or a local qualified Realtor® in your area. It is a good idea to speak to an attorney about your options ( I am not an attorney and can not give legal advice.) If you decide to proceed with a short sale, gather all information you can to support your need to sell your house short (loss of income, divorce, debt, illness, etc). You will need to write a hardship letter (your opportunity to complain about your situation) and you will have to provide the lender with financial information.

Please feel free to contact me with any questions - Mark Zoeller (603) 817-4113
Realtor®- NH and Maine