Abby Oglesbee
Coldwell Banker Schmitt.
29967 Overseas Highway Big Pine Key, Fl, 33043
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Welcome to Your Keys to Paradise and everything you need to know about Lower Florida Keys Short Sales and Foreclosures.

Short Sale Effects on Credit
 
Sellers may wonder whether doing a short sale would affect their credit less than completing a foreclosure, and whether there are other advantages between the two. While in foreclosure, and depending on state laws, a seller could possibly stay in the property, essentially rent free, for four months to a year before being forced to vacate. But that fact alone does not mean a foreclosure is better.
Whereas a short sale involves offering the home for sale, generally listed through MLS. Potential home buyers will make appointments to view the home, some will make lowball offers, agents might hold open houses and, in general, a seller's life will be disrupted, all in the hopes that a buyer will buy the home.

How is a Short Sale Seller's Credit Affected?
According to David Steep, division manager at Vitek Mortgage, Sacramento sellers, as well as sellers in other states, will take as big a hit on their credit reports by going through foreclosure or giving the lender a deed-in-lieu of foreclosure, providing they are more than 30 days in arrears. Steep says the points lost on a FICO score are as follows:
·  Foreclosure or Deed-in-Lieu of Foreclosure
Both of these solutions affect credit the same. Sellers will take a hit of 200 to 300 points, depending on overall condition of credit. This means if a seller's FICO score before foreclosure was 680, it could dip as low as 380.
· Short Sale
Streep maintains that the effect of a short sale (providing the sellers are more than 59 days late) on a seller's credit report is identical to that of a foreclosure. The ding on credit will show up as a pre-foreclosure in redemption status, Steep says, which will result in a loss of 200 to 300 points. This means a short sale with a previous FICO of 720 will see it fall from 520 to 420.

My personal experience has been somewhat different. I completed a short sale for a Sacramento seller who was 90 days behind on her mortgage. A few months after her short sale closed, she checked her credit report and found her FICO fell by only 100 points to 671. I suspect every seller's situation varies.
Catherine Coy, a mortgage broker in southern California, agrees with Streep. "The effect on a consumer's credit report -- foreclosure vs. short sale -- is the difference between being hit by a train or a bus," says Coy, speaking about borrowers who are a few months in arrears.