Many homeowners continue to be confused about whether or not they should sell their home as a short sale or just let it go to foreclosure. The most challenging trial is when one is faced with the possible loss of their own home. This, unfortunately, is commonplace in the state of Nevada. Nevada’s city of Las Vegas has been the leader of distressed homes for sale with Short sales and foreclosures. Areas affected the most in Nevada are communities like Aliante, Anthem, Mountains Edge and even some high end communities like Canyon Gate and Queensridge. Summerlin short sales are growing to a level that, like a double edged sword, is bad for sellers, yet, great for buyers.
Foreclosure expert and short sale attorney, Spencer Judd, has mentioned that most of the time (all depends on clients financial situation) the client should close their short sale before letting it go to foreclosure. There are a few reasons that support his statement. First, a client becomes eligible to finance another home much sooner by having the short sale on their credit vs a foreclosure. Plus, each bank has what they call “bank overlays” which are greater restrictions to the guidelines set forth from fanniemae, freddiemac or FHA. Thus, a bank can add conditions to a loan as they see fit to protect the bank even if the guidelines do not call for it. For example; FHA may require a minimum of 580 FICO credit score to be eligible. However, the bank may require and overlay of 640 FICO credit score to be eligible with that bank.
Overall, typically the best for any distressed homeowner between short sale vs. foreclosure is usually to short sell their home. Letting it go to foreclosure is the easy way out, but usually has much more serious repercussions. We always suggest to each homeowner that they get legal counsel from a real estate attorney and tax advise from a tax attorney and/or CPA.