Lisa and Jim's Northern Nevada Real Estate Blog: Do Not Let Your House Go To Foreclosure Without Taking Every Step To Prevent It.

Do Not Let Your House Go To Foreclosure Without Taking Every Step To Prevent It.

If you owe more than your property is worth, you have as a Distressed Property.  Until recently, working with Distressed Properties was fraught with peril for agents, and owners were often told to "let it go", ie.- stop making payments and let the lender foreclose.  We'll spare you the horrific Short Sale experiences as well as our speculation as to why the lending industry was so slow to adapt to the need to cooperate with home owners and their agents.  Times have changed and Short Sales are now viable and should be given serious consideration.  

Unknown to most of us until about 18 months ago, Short Sales are now very common, and it is very important to understand their benefit to the homeowner.  Consider some of the following differences between the effects of a Foreclosure versus a Short Sale:  

Credit Score:  A Foreclosure will lower your credit score 250 to over 300 points for over 3 years.  A Short Sale will show late payments, but the score will be lowered as little as 50 points, and the affect can be as brief as 12-18 months. 

Credit History: Foreclosure will remain on credit history for 10 years or more. Short Sale is not reported on a credit history as there is no specific reporting item for "Short Sale".  Foreclosure remains on public record forever as it is recorded. 

Employment: Employers often actively check credit of employees in sensitive positions - especially security clearances (Military, Police, Public Communication, Public Utilities, etc).  Foreclosure can result in immediate reassignment or termination if employed, or can prevent you from being hired if you are looking for work.  A Short Sale is not reported on credit report ... is not a challenge to employment. 

Deficiency Judgment: In a Foreclosure the bank has the right to a deficiency judgment.  Some successful Short Sales provide for the lender to give up the right to a deficiency judgment.  If a deficiency judgment is pursued the Short Sale's higher yield from the sale results in a lower potential judgment amount. 

Future Fannie Mae Loan: After Foreclosure you'll be ineligible for a Fannie Mae backed loan for 5 years.  Short Sale - 2 years.  

Future Loans: For 7 years you will be asked on your application if you have had a foreclosure, but there is no similar declaration regarding a Short Sale.    

Our Advice:  There is now a designation known as Certified Distressed Property Expert that has been earned by local real estate agents to help Sellers and Buyers of Distressed properties.  If you have cash flow or moving issues, we suggest you get professional help to assess your situation, determine alternative options, and make an action plan.  The world of Short Sales and Foreclosures has changed from the frustrating mass confusion that it was to today's smoother processes with positive results.  Though there is still frustration and emotion, help is available to you that can help you establish and achieve your goals through the confusing maze. 

Whether getting the financial elephant off your back, moving to put the family together, or other bona fide reason for selling ... if you have a Distressed Property get with a Certified Distressed Property Expert and take control of your future.  Foreclosure is the last what you can to avoid it.   

When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472,,

Comment balloon 13 commentsLisa Wetzel • April 15 2009 11:23AM


Featured @ Club Chaos

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) over 10 years ago

Good advice here.  Thanks for posting the differences for everyone to see.  I find that many people would rather do a short sale, it is their lender that is the roadblock.  SO in a perfect world.

Posted by Terrylynn Fisher, HAFA Certified, EcoBroker, CRS, CSP Realtor, Etc. (Dudum Real Estate Group - over 10 years ago

More people need to hear this message.  I do believe that the impact on credit will be less severe once we move through this crisis simply due to the sheer numbers of people affected.  The market will figure out a way to get people back into the system.  That said, doing everything possible is just plain good sense!

Posted by Kate Bourland, Onlilne Marketing Mobile Marketing (Marketing with Kate) over 10 years ago

Good useful advice. Unfortunately, many homeowners are in a position where foreclosure is virtually unavoidable.

Posted by Cheryl Powell - The Powell Team, Concord,Harrisburg & Charlotte NC Area Real Estate (Southern Homes of The Carolinas - The Powell Team) over 10 years ago

Lisa - all excellent advice, now if we can only get people to be a bit proactive and take steps to prevent foreclosure, and short sale, before it is too late.

Posted by Mike Saunders (Lanier Partners) over 10 years ago

Kate B, that is a very interesting idea. Scoring on an adjustable curve may be in order, eh?  lot of people have been affected by this.

Cheryl P, that is the sad reality. I've been getting a lot of contact from people who want to negotiate a short sale. Some want to even though they have time to try and sell on the open market at a decent price.

I'm with you on that one Big Mike. :-)

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) over 10 years ago

C - Thanks for the feature and the awesome comments!  I've been distracted and not raining for the past couple of days.  I don't know about you but we have been very busy here in Northern Nevada.  YEAH!

Mike- We are actively working to let folks know about the advantages of Short Sales, I had a sale approved yesterday in less than three weeks!  Buyers are very happy, Seller's are relieved and the agents get to close.  Something new is going on out there!

Cheryl - Some are unavoidable and that's sad because homeowners are being forced into unhappy consequences as a result.  We want to try and help as many as possible.

Kate- I agree!  This is a win/win and surely there will be programs for the innocent folks who are victims of this crazy economy.

Terrylynn- I just recently learned the actual difference in how foreclosures affect credit rating as compared to a short sale!  I confess, I thought I understood before but really didn't.  It's a major difference.

Posted by Lisa Wetzel, CDPE, SFR (RE/MAX Realty Affiliates) over 10 years ago

This is good information. Sellers should approach the lender and see if they can be approved for a short sale and price it accordingly.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 10 years ago

Lisa - Great Post. We sent out a press release regarding the CDPE designation and I blogged about it the other day. We can change the direction of the real estate market - one agent and one neighborhood at a time - if we commit to it.

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (RE/MAX Realty Affiliates) over 10 years ago

Gita - Thanks for your comments,  you are  right ... it's all about communication!  Pricing is paramount!  Anything will sell at the right price!

Christianne - We are It!  And ... You Know What? ... We need to do this!   Let's go!  I love to have great people to work with!

Posted by Lisa Wetzel, CDPE, SFR (RE/MAX Realty Affiliates) over 10 years ago

I would have to agree with my little sister C on this post, wonderful material and featured at:


Posted by Robert Vegas Bob Swetz, Las Vegas Henderson Homes for Sale (Realty ONE Group) over 10 years ago

Robert - Thanks for the feature!  I appreciate your support!  This continues to be a very very interesting topic and great source of new business for us!  The future is rosy in short saLes and we are planning to be a big part of it in our market!

Posted by Lisa Wetzel, CDPE, SFR (RE/MAX Realty Affiliates) over 10 years ago

Your very welcome Lisa and I will read you later in "The Rain"

Vegas Bob

Posted by Robert Vegas Bob Swetz, Las Vegas Henderson Homes for Sale (Realty ONE Group) about 10 years ago