Northern Virginia Real Estate: Difference Between Short Sale and Foreclosure

What is the difference between a short sale and foreclosure?

Both, are typically when you are not in the position to pay your mortgage and many times that you may be upside down on the mortgage as well.

Let’s say - you owe $500,000 and the property can only sell for $400,000, there’s a $100,000 difference.

FORECLOSURE

A foreclosure can be a tragic or devastating thing in your credit or even in your emotions, your everything. Just bad!

So, what happens in that case, the bank will take the property back because that’s collateral to them and made you promise to pay. 

That loan is represented by a mortgage 

Bank perspective - mortgage is an asset

Seller perspective - the mortgage is a liability 

If you stop paying the bank, they’ll become a non-performing asset, and then at some point, they need to take the collateral back. 

When they do that, it’s going to devastate your credit for the next several years. Also, remember that $100,000 difference?

The bank still has the right to be able to come back for that for any time. 

SHORT SALE 

Same scenario, you still have the asset and the liability, you're not able to pay your mortgage. 

Here’s the difference - You find a SHORT SALE specialist, you place your property in the market, you can manage the time and AGAIN remember that $100,000 difference?

When we find that buyer, and the SHORT SALE specialist helps to negotiate that deficiency, then that $100,000 either goes away or you will be able to negotiate that to something that makes sense to you.

SHORT SALE IS THE RIGHT OPTION.

If you want to know more about short selling, I'm happy to help you out. Send me an email at Dan@greetingsvirginia.com or call me at 703-346-2776 and I’ll be glad to answer specific questions for you.


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Dan Rochon

Dan Rochon is an Associate Broker in VA, Broker in MD; Owner of Rochon Investments, LLC; Owner and Co-founder of www.GreetingsVirginia.com and Owner of other Joint Ventures as well as a real estate principles instructor at Moseley Real Estate Schools.

As a real estate sales agent, Dan and his team are consistently top producers in their marketplace and provide solutions for their clients. Through their investing company, Dan and Traci Rochon have been investing in residential and commercial real estate ventures for more than the past decade.

Dan and his wife Traci are frequent speakers and are often quoted in media stories about the current real estate market. The Rochon's have been featured on The Nightly News with Brian Williams, The Today Show, CNBC, The Washington Post, The Washington Examiner, WTOP News, Voted as The Best of DC Real Estate Agent in the Washington City Paper Readers Poll, and more...