“Covington KY Real Estate: Understanding the Differences Between Short Sale and Foreclosure”

A scale with "short sale" on one side and "foreclosure" on the other side signifying there is a difference between them.
Foreclosure vs Short Sale

If you’re a homeowner in Covington Kentucky and you’re struggling to make your mortgage payments, you may be considering a short sale or foreclosure. Both options have their advantages and disadvantages, and it’s important to understand the differences before making a decision. One thing to consider is “What is peace of mind” worth to you? Unless you have experienced it, it’s hard to put a value on not having it. I know because I went through some rough times in 2007 and I live my life now in hopes of never experiencing that again.

What is a Short Sale?

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Short Sale

A short sale is a real estate transaction in which a homeowner sells their property for less than the outstanding amount owed on their mortgage, with the lender’s approval. In a short sale, the lender agrees to accept less than the full amount owed on the mortgage in exchange for releasing the homeowner from their debt obligation.

Short sales are typically initiated when the homeowner is unable to continue making their mortgage payments, and the property is worth less than the outstanding balance on the loan. Short sales can be a viable alternative to foreclosure, as they allow the homeowner to avoid the negative impact on their credit score and the potential legal and financial consequences of foreclosure. We wrote an entire blog article on “SHORT SALE” if you wish to get more info.

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Advantages of a Short Sale:

  1. Avoiding Foreclosure: One of the most significant advantages of a short sale is that it allows homeowners to avoid foreclosure, which can have long-lasting negative consequences on credit scores, the ability to obtain credit or a new mortgage, and the selling process of the home. Foreclosure is really bad so consider a short sale.
  2. Less Damage to Credit Score: While a short sale will still have a negative impact on a homeowner’s credit score, it is typically less severe than the impact of a foreclosure.
  3. Possibility of Debt Forgiveness: In some cases, the lender may be willing to forgive some of the outstanding debt, making it easier for the homeowner to move on from the short sale and start over.
  4. Control over the Selling Process: In a short sale, the homeowner retains control over the selling process and may be able to sell the home through a private sale.
  5. Sometimes the advantages aren’t as obvious so check out HERE for more information.
A red triangle with the word "disadvantage" written across it.

Disadvantages of a Short Sale:

  1. Potential for Deficiency Judgments: In some cases, the lender may require the homeowner to pay the difference between the sale price and the amount owed on the mortgage. This is known as a deficiency judgment and can result in additional financial hardship.
  2. Time-Consuming: A short sale can be a time-consuming process, and it may take several months to complete. Homeowners who are in a hurry to sell their homes may find that a short sale is not the best option for them.
  3. 7 disadvantages of a short sale are highlighted in this article, HERE for your review.

Like anything in life, you have to way the pros and cons and make your own decision. Ask friends and family for their thoughts. And if you need professional advice, we are here to help.

What is a Foreclosure

For Sale Sign with the word "foreclosure" on top signifying that this sale is a foreclosure sale.

Foreclosure is a legal process by which a lender seeks to recover the outstanding balance of a mortgage loan by forcing the sale of the property that was used as collateral for the loan. Foreclosure occurs when the homeowner defaults on their mortgage payments, and the lender takes legal action to take possession of the property and sell it to recover the outstanding debt.

The foreclosure process typically begins when the homeowner misses one or more mortgage payments. After a certain period of delinquency, usually three to six months, the lender will send a notice of default to the homeowner, notifying them that they are in breach of the terms of their mortgage contract. If the homeowner fails to remedy the situation, the lender will file a foreclosure lawsuit in court. We wrote an entire article on FORECLOSURE for your review if you wish to learn more about it.

thumb pointing up representing an advantage

Advantages of Foreclosure:

  1. Time to Find Alternative Housing: During the foreclosure process, homeowners may be able to stay in the home and continue to live there, giving them time to find alternative housing.
  2. Possible Forgiveness of Debt: In some cases, the lender may be willing to forgive some of the outstanding debt, making it easier for the homeowner to move on from the foreclosure and start over.
  3. Relief from Mortgage Payments: Once the home is foreclosed, the homeowner is no longer responsible for making mortgage payments, allowing them to redirect their finances towards other expenses.
  4. Here are some “Advantages of Foreclosure” from HGTV.
image of a thumb pointing down to represent a disadvantage.

Disadvantages of Foreclosure:

  1. Negative Impact on Credit Score: Foreclosure can stay on a credit report for up to seven years and can have a significant negative impact on a homeowner’s credit score. This can make it difficult to obtain credit in the future, including loans for a car, credit cards, or another home.
  2. Difficulty Obtaining a New Mortgage: It may be challenging for homeowners who have been foreclosed upon to obtain a new mortgage for several years. This can make it difficult to purchase a new home in the future.
  3. Loss of Control over the Selling Process: In a foreclosure, the lender takes control of the selling process, which can be a stressful and emotional experience for homeowners who feel like they have lost control of their home and their financial future.
  4. If you wish to see many more “Disadvantages of Foreclosure“, here you go.
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In Conclusion


Foreclosure may be the best option for you and your family. Make the decision after you know all the facts. Do lots of research and if you need professional help, we are here for you. It is always good, when possible to speak with friends and family, especially those who have gone through a short sale or foreclosure. You can also use this article and do your own research which is never a bad idea.

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And here is an offer that is hard to refuse, reach out to us and we’ll HELP you.  We are local real estate buyers and we can answer your questions.  Check out our Google reviews, LOCAL HONEST HOMEBUYER GOOGLE REVIEWS

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