What is the Credit Impact of a Short Sale vs Foreclosure?

I was recently asked the question by a homeowner going into foreclosure…
What is the benefit of going into a Short Sale vs Foreclosure?
Although this is a question we get asked with nearly every client, this particular client wanted to know all the exact specifics. Since you are reading this now, you can probably benefit from the information that we found out when digging even deeper into the issue of what is the best option for most homeowners: Short Sale or a Foreclosure?
After doing all the research I am convinced now more than ever that the decision is a no brainer for most homeowners… A Short Sale is the OBVIOUS choice. Take a look at an email I sent to this client and see for yourself:

“Hope your doing well. We have been playing a little phone tag lately it seems, give me a call back when you get the chance.

After our conversations, you sparked an int
erest in me getting to the bottom of the question Short Sale vs Foreclosure?

Along with finding out great information on the mortgage debt forgiveness relief act:

I also recently contacted Fannie Mae to get their latest guidelines as far as the exact credit impact of a Short Sale versus a Foreclosure, which I thought would be helpful to you in your research:

Short Sale: Fannie Mae refers to these as “Preforeclosure Sales” and requires only a 2 year waiting period after the sale, with acceptable re-established credit to re purchase.

Foreclosure: Standard minimum 5 years waiting period, with minimum of 10% down & 680 credit score for 7 years to re purchase. Primary residences only, no second homes or investment property loans for 7 years.

Take a look at the full report: https://www.

Give me a call when you get the chance and we can discuss how you wish to move forward.”
Meaning: If the property owner goes through a Short Sale they will be able to purchase a home again in the next 2 years. A foreclosure on the other hand, they will have to wait at least 5 years!
The question is simple: Do you want to purchase a home again in 2 years or 5?
Who would want to do a foreclosure? Which do you think is better?
Contact me anytime for help or questions,
Oliver Graf
Real Estate Expert

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  1. Nice article, I am lucky that I visited your site. I am planning to buy foreclosure because I thought that foreclosure is better than short sale, now I know that short sale is better than foreclosure. Thanks for the tip!

  2. Hello I want to congratulate to them by its site of the Web of the excellent looks like entertained and very good very to me it elaborated. I invite them to that they explore a little on my Web site.

  3. Excellent article. I am new to short sale investing and always appreciate good information.

  4. The main advantage of short sale is that you’re safe from foreclosure, which damages your credit more than a short sale does. You don’t get to keep your home, as you do with a loan modification, but you limit the impact on your credit report and keep your credit options intact.