Short sales, deed in lieu and foreclosures are complex processes and there are no standard answers since they are: state, lender, investor and individual mortgage specific so consult a lawyer and tax adviser before you make any decisions. The complexity of short sales is why I work with a law firm who actually handles the short sale while I handle the sale and marketing of your property.
| Consideration | Short Sale | Deed in Lieu | Foreclosure |
|---|---|---|---|
| Credit impact | Large | Larger | Huge |
| Tax implications | Likely none(1) | Likely none(1) | Likely none(1) |
| Bank approval required? | Yes | Yes | No |
| Process time | 6 to 9mo(2) | 2 to 4mo(2) | 6 to 9mo(2) |
| Bank preference | Banks prefer short sales since they typically get more money than a deed in lieu or foreclosure and they do not end up having to hold title. | Banks prefer deed in lieu to foreclosures. | Banks hate foreclosures |
| Time limit for bank to file for a judgment | 6 years | 6 years | 6 months |
| Automatic waiver of judgment | No | No | No |
| Probability of getting a waiver | Of the three, it is more likely that a waiver can be negotiated with a short sale since the bank does not want to take title (deed in lieu or foreclosure) of the property plus the government will contribute funds to lenders in specific situations (HAFA). | The bank has nothing to gain so there is less likelihood that they will agree to a waiver. | None |
Notes:
1: This is situation and state dependent. Seek professional advice.
2: Some lenders/investors may require the home to be listed and on the market for 2 to 3 months before the lender will start the process
Contact me if you are considering buying or selling Las Vegas real estate. You will be glad you did.
...Eric
Eric Fernwood
RE/MAX CENTRAL
8400 W. Sahara Ave
Las Vegas NV 89117
Email: EricFernwood@gmail.com
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