174. Short Sale vs Foreclosure in California – What’s the Difference?

We Buy Houses In California. Whether you are a buyer or a borrower/seller, there are various advantages and difficulties in a short sale and foreclosure. We are local homebuyers in CA and we want to guide you. Let’s clarify the difference between the two when you try to sell your California home quickly!

What Is A Foreclosure In California?

Simply put… “A foreclosed home is one where the owner can not make his mortgage loan payments, and the bank repossessed the property”. When you stop making payments to your home … Your lender is entitled to foreclose your property so that they can seek to recoup their money that you have been lent.

If a borrower fails to make mortgage payments, a house usually is foreclosed on. The lending entity assumes possession and control of the property and the borrower is evicted. Then such properties are sold at auction or more conventional means using real estate agent service. A foreclosure will impair a borrower’s credit rating, and make it very difficult for several years to obtain a mortgage.

Depending on what state you’re living in … A foreclosure can work in many ways. See how you can reach out to banks to help avoid the foreclosure and find out more about the details as to the foreclosure process here on the website of the HUD Government.

What Is A Short Sale In California?

In a short sale, the borrower still owns the home. A short sale is defined as… “A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner can not afford to repay the liens ‘ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt“. (source: Wikipedia)

A short sale is in some cases an option decided by borrowers and lenders. The house is being sold on a short sale for less than the unpaid mortgage balance. The borrower may or may not still owe the unpaid balance (known as the deficiency).

This option usually takes some time, as the mortgage will be held by several different lending institutions. All parties with an interest in the property must agree to the terms of the sale, and if only one lender does not agree, a potential deal may fall through.

Short Sale vs Foreclosure In California – Your Options

While both options can have ramifications, a short sale often has less of an impact on the borrower’s creditworthiness. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points.

Borrowers who are foreclosed on are often ineligible to purchase another home for 5-7 years with a traditional mortgage, where under certain circumstances, a short sale borrower can purchase immediately.

As many Americans struggle with an economy that has yet to completely recover from the 2008 crash, folks are having a hard time making monthly mortgage payments. Choosing between being foreclosed and initiating a short sale (or a 3rd option…  selling your California house fast) is an easy choice for a borrower having trouble paying their mortgage on time.

Sometimes, lenders are willing to work with borrowers to complete a short sale, to avoid the fees and time-consuming process of conducting a foreclosure.

Our suggestion is always this.

  1. Talk with your lender and discuss ways that they can work with you on your loan. We offer this service where we can help guide you in the right direction if you run into issues with your lender… just reach out to us on our Contact page and we’ll discuss your situation.
  2. Attempt a short sale or other programs your lender may have that forgives part of your loan, creates a new / more affordable monthly payment so you can get back on your feet, etc.
  3. If the bank isn’t willing to work with you very much… your best option may be to sell your property. Work with a local real estate home buyer service like Premier Property Buyers to sell your house fast for an all-cash offer. If you’re interested we can look at your situation and make you a fair offer on your home within 24 hours. Just fill out the form on our website over here >>
  4. Foreclosure. The last resort is to let the property fall into foreclosure. This is the worst possible scenario. It’ll harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished.

Sell My House In California

By knowing your options, you may be able to dodge a significant impact on your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale, sell your house in California directly to Premier Property Buyers can be the better option. We are your local California home buyers and we offer cash for houses in CA. We can close in as fast as 7 days and we can help you!

Have a pending foreclosure? We’d like to make you a fair all-cash offer on your property. Give us a call anytime at (949) 356-6763 or fill out the form on this website today! >>

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