Short Sale vs. Foreclosure

The biggest thing that everyone understands from the beginning of this debate is that foreclosure has a greater impact on your credit. Typically, a foreclosure will remain on your credit for five to seven years. With a short sale, the damage to your credit is really a maximum of two to three years.

From a financial standpoint, the comparison is more important. With a foreclosure, you are not in control of the transaction. However, with a short sale, you are selling your property. So the contract is between you and the buyer. The lender is only involved when they have to approve the amount of money that they will accept.

There are some tax ramifications when you compare short sales and foreclosures. We would recommend that you speak with an accountant to get the specifics.