How will a short sale effect my credit?
A short sale in Real Estate happens when the owner of the property owes more on the property than what it sells for. This can happen when a home owner sells after property values have dropped drastically, or when an owner has taken out equity loans on top of the mortgage loans and the loans equal more than the value of the home.
Generally speaking, it will depend on your lender. Before you proceed with a short sale, you would be well advised to call them to find out how they structure and release the short sale.
As well as, how are they going to report the payoff? A short sale can reduce your credit score between 60-100 points, but there have been times when the short sale does not affect your credit score negatively at all. (A foreclosure would be a minimum of a 150 point deduction) This of course will depend on your specific situation. For example, a seller that has missed recent payments and is doing the short sale to avoid a foreclosure would take a bigger hit than the seller that is current on their mortgage, but property values have decreased so they are unable to sell the property for what they owe.
If you decide to sell, and are facing a short sale/foreclosure situation, be sure that the agent you select to list your home has experience in dealing with short sales. 
Each bank has their own requirements. The Kuchta’s - Kelly & Colleen are very familiar with the short sale process/foreclosure process and have helped many sellers, as well as buyers with their transaction. Feel free to contact us for a no obligation, consultation 262-894-6512, or ckuchta@shorewest.com. We are here to help.
Posted By:
Colleen Kuchta
