Short sales are always preferred over foreclosure. because compared to foreclosure, short sales are known to be beneficial for all the parties involved (borrower, lender, broker and buyer).
There are probably millions of properties now in the U.S where the home is actually worth less than what is owed on the mortgage. In these situations, lenders are usually willing to accept less than the full amount due to avoid a foreclosure process.
Negotiating a short sale with the lender is a difficult and lengthy process. However, from a lender’s perspective, compared to foreclosure, short sales save many of the costs associated with the foreclosure process. Attorney fee’s, the eviction process, delays from borrower bankruptcy, damage to the property, costs associated with resale, etc. can all be avoided or diminished with a short sale. The lender also has a chance to consider competing offers which may drive the price up and diminish losses. It’s important for everyone in the process to have patience and understand that the outcome of a short sale is in everyone’s best interest.
A borrower should maintain patience knowing full well that a foreclosure carries far more negative consequences. Because all foreclosure transactions become public record, the borrower could end up with a negative public perception. The effect of foreclosure remains public record for 7 to 10 years. That’s a long time to wait for a record to clear. During this time, it will be almost impossible to purchase a home again and there are even cases where employment can be affected by a publicly know foreclosure.
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