Foreclosure Vs Short Sale - What Should You Do?

When navigating through the real-estate world, understanding all the terms can be confusing. In this article we are going to go over the difference between a short sale and a foreclosure.

Okay, so first let's talk about a short sale. A short sale is when we get the bank to agree to accept less money than what is owed on the piece of real estate.

I had a friend that owed $180,000 dollars on a home and we got the bank to take $123,000; that's quite a reduction. Now going through the short sale process isn't easy. It takes about a year to get accomplished but it's much better than a foreclosure.

A lot of people ask me how they would know if they qualify for a short sale.

The truth is it's pretty vague. First of all, I want to tell everybody that when we run into a challenge in life, we feel like we are the only ones dealing with those challenges so I think it's really important to understand that one out of nine people are behind on their payments right now in the United States of America.

My own son is going through a short sale right now because the prices have dropped so much. I've got a short sale on my own record because I co-signed for my sister years ago and she was embarrassed to tell me she was late on her payment. So I wasn't able to help her fix the issue.

To qualify your home, you basically have to show evidence that you have lost your job, your income or marriage. Things like that.

Okay, so now let's talk about a foreclosure.

A foreclosure occurs when people stop paying their note on the property and then walk away from it. Nobody is working with them to get the property sold and eventually the bank will take ownership of that property.

If you're in the market to buy a home it is a safe assumption that you're going to get a good deal as long as you do your research. If I said it once, I have said it one hundred times, nothing is better than the right research.

Remember that this process is a very, very long process. You have to be patient with the banks. Because just about every bank is extremely frustrated. They are overworked and under-manned right now; you earn that benefit. So be patient if you pursue any real estate options these days.