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Short Sale vs Foreclosure… – What’s The Difference?


Hey, Oklahoma, whether you’re a buyer or borrow or a borrower seller a short sale in foreclosure each, represents and presents different advantages and difficulties

So, what exactly is a foreclosure in Oklahoma City OK in layman’s terms a foreclosed home is basically one in which the owner is unable to make his mortgage payments in the bank repossess is the home. If you stop making your house payments quite frankly your lender has the right to foreclose on your property so they can attempt to recoup the money that they had lent or let you borrow.

A home is typically foreclosed on when the borrower fails to make the appropriate mortgage payments. The bank or lending institution assumes ownership and possession of the property by evicting the borrower from their home. These properties are then sold in an auction or sometimes via traditional means by utilizing a real estate agent for their services. A foreclosure can damage your credit rating then make it very difficult to obtain a mortgage in future years usually the timeline is 7 years or more.

Depending on the state that you may live in a forced closure can work in different ways, wow For more information check out the foreclosure process here at the hood at the HUD Government website.

What is a short sale?

In a short sale, the home is still owned by the borrower.

A short sell is where a homeowner sells their property (with the approval of the bank) for less than the owed mortgage balance. The unpaid balance which is also known as a deficiency may or may not still be owed by the actual borrower. Luckily, we have a licensed realtor on our team who specializes in Foreclosures and Short Sales to ensure that you have the appropriate individuals in your corner to help.

The short sell option typically takes some time to process as a few different lending institutions may own the mortgage. There may be other parties who have an interest in the property, and they must also agree to the terms outlined in the sale. If the other parties do not agree the potential arrangement could fail because one lender/interested party doesn’t agree.

Short Sale vs. Foreclosures What Are Your Options

While both options of either a short sale or foreclosure can have significant ramification a short sale option often has less of an impact on the borrower’s creditworthiness. A foreclosure can impact a borrower’s credit score by 300 or more points, while a short sale may only just have a small dent to your credit score by as little as 100 points. Remember credit is a constant revolving factor.

Borrowers who are foreclosed on will often be ineligible to purchase another home for as much 7 years or more if they will be using a traditional mortgage. Now under certain circumstances, a short sell borrower may qualify to purchase a house immediately or in as little as less than two years.

While many Oklahomans struggle with the economy and the current situation of this pandemic with COVID-19 many families and individuals are having a hard time making monthly mortgage payments simply because they have been furloughed or have seen a decrease in their income due to the hours being reduced at work. So, choosing between the options of being foreclosed and initiating a short sale what or a third option selling your Oklahoma City home fast is an easy choice for a borrower having trouble paying their mortgage on time.

There are cases where lenders are willing to work with borrowers to complete a short sale to avoid fees and the time-consuming process of conducting a foreclosure. (be aware that not everyone will qualify for this).


Here is what we suggest:

  1. Contact and talk with your lender to discuss how they can work with you on your loan. Exit Strategy Investments actually offers this service and we can help guide you in the right direction if you run into issues with your lender just reach out to us on our contact page and we’ll discuss your situation.
  1. Try a short sell or some other program your lender may be able to provide. Your lender may have other programs that may be available by your lender include a refinance, a loan modification, a whole restructuring of the existing loan entirely, or possibly you may qualify for a forbearance, so you can get back on your feet.
  1. If the bank isn’t trying to work with you… your best option may be to simply sell your house. Work with a local real estate home buyer like Exit Strategy Investments to sell your house for an all cash offer. If this is something you may be interested in we can look into your situation and make you a cash offer on your house within 24 hours. Just fill out the form on our website and we will be in contact with you shortly.
  1. Do Nothing – Foreclosure. The last resort is to let the house fall into foreclosure this is the worst possible scenario you would want to deal with. For the mere fact is that it will harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished this deficiency balance is what may still be old.

Once you are aware of your options you may be able to dodge a significant impact to your credit score, which will allow you to purchase a new home once your situation improves. Just remember a foreclosure on your credit report makes that possibility extremely difficult for seven years or more so if you have the opportunity; a short sale may be the better option.


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