Guide to Short Sales vs. Foreclosure in Western New York

If your mortgage balance is greater than the market value of your home, and you are falling behind on payments, you may feel trapped. In Western New York, you have two primary exit options: request a short sale from your lender, or allow the bank to proceed with foreclosure. Both have different financial outcomes.

What is a Short Sale?

A short sale occurs when you sell the property for less than the mortgage balance, and the lender agrees to accept the sale proceeds as settlement for the debt. While this requires lender approval, it has benefits:

• Less Credit Damage: A short sale will damage your credit score, but you can typically qualify for a new mortgage in 2 years.
• Voluntary Sale: You remain in control of the sale process and work with a buyer to settle the debt.

What is Foreclosure?

A foreclosure is a legal process where the lender sues to take ownership of the property and sell it at a public auction. It has significant drawbacks:

• Severe Credit Damage: A foreclosure stays on your credit report for 7 years, making it difficult to qualify for future loans.
• Deficiency Judgments: In NY, lenders can sue you for the "deficiency"—the difference between the auction price and your mortgage balance.

If you have equity in the home but need to sell quickly to prevent foreclosure, Peak Cash Buyers can buy your home directly. See how to avoid foreclosure in WNY.