Profile picture for js6571404549

What is worst on credit? Deed in lieu or a Short sale???

What is worst on credit? Deed in lieu or a Short sale???
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
December 18 2008 - Gilbert
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (12)

Best Answer

A deed in Lieu is more damaging to your credit. But the question I would ask you is what is your situation and what are you trying to do with your property?

A short sale is a great option if you need to sell your property because your are insolvent both long term and short term, and you have negative equity on the property.

If you would like to stay in your home and your financial hardship is short term, a mortgage modification or loan modification is a much better alternative.

Both a short sale and loan modification are much better alternatives to a foreclosure, deed in lieu or bankruptcy.

 

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
December 21 2008
Deed in lieu. Not selling you my services, this is really easy. Short Sale is an agreement, deed in lieu is a short cut. Short Sale will settle the account in full ( in most cases) deed in lieu will only pass title to Lien Holder with no other conditions in your favor.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 10 2011
Profile picture for P Banks
Thanks for this chart Pasadenan Man, I love visuals like this to show clients. I just saved to my computer & will include it with my short sale initial consultation package. I must have missed it when it was posted. There,s still good reasons to use a Realtor. Someone to deal with the bank for them or  if they qualify for the HAFA program, I help them get the $3,000 moving expenses.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 02 2011
Profile picture for Pasadenan
Here is the list that was published on this website this week:


(Of course agents will tell you a deed-in-lieu is "worse" as they don't get a commission from that...)
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 01 2011
A deed in lieu is way worse on your credit than a short sale.  I would suggest that you find a quality broker to talk to about this, talk to a licensed broker with a cdpe designation.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 01 2011
Profile picture for shasta_steve

I know this is old but the knowledge of the real estate industry on this topic is pretty sad to say the least.That or they are just outright lying.   If you went late on your short sale, then the actual credit drop is almost identical.  Very few people out there are able to do a short sale and remain current on their mortgage.  My FICO states that the credit drop for short sales and foreclosures is the same.   I can tell you from personal experience that my foreclosure caused my credit to drop right at 80 points.  I am over 700 and rising a few months after mine. 

In non-recourse states the short sale can actually leave you vunerable to the bank slipping something your contract that may make you liable when you would not have been if they had just foreclosed.  Another thing you real estate agents need to keep in mind when you comment on things like this is it has more to do with state law than anything else.  Advice from Florida is absolutlely worthless in California and vice versa.  

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 12 2011
What I have been taught and my understanding is, and I am NOT an attorney or accountant, is this:  a  short sale can effect you credit by appoximatley 50 points and an actual foreclosure by 200 points!  A short sale should stop the bank from coming after you in the future. A foreclosure leaves it open for the bank to come after you for the loss in the future.  I am not sure what happens when you give the keys back to the bank voluntarily in a deed in lieu.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 12 2011
Profile picture for sunnyview
You can ask an attorney a question for free on the Avvo.com forum here 24/7.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 12 2011
We'll be speaking with our attorney on our radio show today at 8:30 am on www.wjno.com.  If you have short sale question or options, we hope you can tune in and get some free legal advice. 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
March 12 2011

This is not tax or legal advice. Seek appropriate tax or legal counsel.

Short sale is much less damaging to your credit than a deed in lieu. A properly negotiated short sale will show up as a debt paid in full. There will be no indication on your credit that the sale was a short sale. The hit to your credit will come from late payments or no payments which could prevent you from obtaining credit. The hit will be 25-100 points which should drop off your credit report after two years.

The short sale should be negotiated so the lien holders accept the short sale as payment in full with no recourse. You will receive a 1099 for the forgiven debt. If the lien holder has recourse, then you will not receive a 1099 and the debt continues to be collectible. A lender can forgive the debt and issue a 1099 or continue to collect the loan deficiency but not both.

If the property is a primary residence, then up to $2M of the loan deficiency may not be taxable income. Please seek appropriate tax or legal counsel. Mortgage Debt Forgiveness Relief Act and Debt Cancellation http://www.irs.gov/individuals/article/0,,id=179414,00.html

A loan modification is a good idea, but you need to be aware that it may not solve your financial problem. According to Comptroller John Dugan, Office of the Comptroller of the Currency, after six months more than 50% of borrowers who received a loan modification re-defaulted. http://occ.treas.gov/ftp/release/2008-142.htm


Cheers,
Michael P. Lindekugel
Commercial Realtor
Certified Distressed Property Expert

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 12 2009
Either way it will still stop you from obtaining financing from FHA. Short sale or Deed in Lieu. Minimum time to obtain financing afterwards is three years. 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 11 2009
A deed in lieu is the worst. A lot of banks might not even be willing to take a deed in lieu. Try a short sale that is the better of the three (deed in lieu foreclosure and short sale. )
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
December 18 2008
 
Related Questions
What is the average days on the market for homes Gilbert AZ,
Profile picture for Michael & Leilani West
Latest answer by Michael & Leilani West
April 01 | 2 answers
structural fortifications
Profile picture for sunnyview
Latest answer by sunnyview
January 15 | 7 answers
  • Asked by perkl8d
  • In Pricing
  • October 03 2013
How do you what a house is worth?
Profile picture for Alfredo Rivera - Bronx Experts
Latest answer by Alfredo Rivera - Bronx Experts
November 06 2013 | 5 answers
I dont want to go through Facebook Connect to add a home for sale.
Profile picture for Jimmy Yao
Latest answer by Jimmy Yao
September 18 2013 | 2 answers
HOw does one list a for sale by owner?
Profile picture for Rob Hale
Latest answer by Rob Hale
August 15 2013 | 3 answers
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 2127 E Desert Broom Dr, Chandler, AZ Home For Sale
    2127 E Desert Broom Dr, Chandler, AZ 85286

     For Sale: $395,000

    • Beds: 5
    • Sqft: 3676
    • Baths: 3.0
    • Lot: 7606
  2. 1558 E Winged Foot Dr, Chandler, AZ Home For Sale
    1558 E Winged Foot Dr, Chandler, AZ 85249

     For Sale: $185,000

    • Beds: 2
    • Sqft: 1258
    • Baths: 2.0
    • Lot: 6211
  3. 6855 E Milagro Ave, Mesa, AZ Home For Sale
    6855 E Milagro Ave, Mesa, AZ 85209

     For Sale: $319,500

    • Beds: 4
    • Sqft: 3293
    • Baths: 3.0
    • Lot: 7353