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Foreclosure vs.
Short Sale

Frequently Asked Questions & Answers

What is a Short Sale?

A short sale in real estate is a special sale of a home where the lender is paid an amount that is LESS than the current mortgage balance owed on the home. This can only be done when the lender agrees to the lower sale price after the seller proves a hardship has created the need for this arrangement.

Who qualifies for a Short Sale?

Generally a Short Sale is granted by the lender to homeowners who have experienced a financial hardship that prevents them from continuing to pay on the mortgage. Rather than foreclose on the home, which is a huge expense to the lender and very devastating to the homeowner’s credit, a Short Sale may be done instead of foreclosure.

Some of the common hardships that lead to a Short Sale are: loss of a job; a serious illness; divorce; financial stresses from liens or delinquent taxes; or even the death of a spouse or loved one.

Will I receive any money at the closing of my home?

Generally no, however a new program Home Affordable Foreclosure Alternatives Program (HAFA) may allow the homeowner to receive 3,000.00 to be used for relocation expenses. As of 2009, the Treasury Department introduced HAFA program to provide a viable option to homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP).

Would it be easier to let my home foreclose?

On one hand, yes it is easier because the seller really doesn’t need to communicate as often with the lender. However, there are some potentially damaging consequences. In some states, a lender may seek a deficiency judgment following a foreclosure to try to get back the money you still owed on the home. The lender may then try to place liens on other properties, garnish your wages, or even repossess vehicles to recoup their losses. This is why a Short Sale may be a better option for a distressed homeowner in that a deficiency judgment and the negative consequences might be avoided. For more detailed information, seek advice from your CPA or legal counsel.

What is the seller’s advantage for doing a Short Sale?

Well, one of the best reasons to do a Short Sale is to try to avoid a lender from pursuing a deficiency judgment against the homeowner. The next reason is preserving the homeowner’s credit.

Both a foreclosure and a short sale will negatively impact a homeowner’s credit, however, a foreclosure is much worse. Foreclosures will remain as a public record on a person’s credit history for 7 years or more. This will hurt the person’s ability to get a new home loan and will put him or her in a high risk category causing much higher interest rates. It could also impact career choices as many employers now check a person’s credit report as part of the hiring process. Also, homeowners who are police officers; security officers, military, and/or CIA could possibly be terminated from their position or lose their security clearance if they have a foreclosure on their credit score.

Will filing for Bankruptcy affect a short sale?

Yes, if you have put the home under bankruptcy protection then the home cannot be sold as a short sale until the home is released or discharged from the bankruptcy. Notify your real estate agent to discuss the options available to you.

Why do banks and lenders accept Short Sales?

At first it seems hard to believe that a bank would be willing to so deeply discount the sale of a home until you look at the situation from their perspective. If a bank forecloses on a home they must repossess it, make repairs, change the locks, and pay for a variety of legal fees. A short sale often costs less than what it cost to foreclose on the home, so the bank has actually saved money. Another reason is that in this distressed housing market with so many foreclosures, the bank doesn’t want too many foreclosures (or bad debts) on their books. This prevents them from borrowing more money from their resources, so they are unable to give out new loans to increase their revenue streams.

What’s the next step?

Contact Matthew today and let him discuss your needs to find out what your options are. You are NOT under any obligation to accept his real estate services by filling out the forms, contacting him, or receiving any information.

Please fill out the online seller’s form by clicking on the Sell Your House button.

Matthew will contact you to begin discussing your options.

Click here to sell your property today!

For Immediate service, call 678-828-4408

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My husband and I were referred to Matthew Sipera, REALTOR® when we needed to sell our home as a short sale. We had looked into other realtors, but they did not have the knowledge that Matthew has...more


Matthew Sipera demonstrated outstanding skills as my realtor. His impressive knowledge of the Atlanta market helped me escape a tough situation. I am very impressed by his persistence and his marketing skills...more


I would never hesitate to recommend you to handle any real estate transaction, as you certainly know all it takes to get the job done. You are an honest and straight forward, dependable individual....more

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