how would a short sale impact my credit score?

Anonymous · ‎10-25-2007

Folks - new to this. I am trying to sell a duplex, with no luck. After many months, I have an offer which is $40k less than the debt I am carrying. I am thinking about contacting the bank, and asking them to accept the low ball offer I have, and make it a short sale (it is a tough market as I am sure you know). I have been trying for 6 months to sell with a realtor with only 1 low offer. If I do get the bank to accept the property sale at $500k against the debt of $540k, and ask them to wear the loss of $40k, what could happen to my credit score? Michael

Anonymous · ‎10-25-2007

With the current tax laws- if the bank "writes off" that 40K you will get a 40K 1099 at the end of the year and have to pay taxes on it.

Go in with an open mind- they may have other options

fused · ‎10-25-2007

michaelellenby wrote:
Folks - new to this. I am trying to sell a duplex, with no luck. After many months, I have an offer which is $40k less than the debt I am carrying. I am thinking about contacting the bank, and asking them to accept the low ball offer I have, and make it a short sale (it is a tough market as I am sure you know). I have been trying for 6 months to sell with a realtor with only 1 low offer. If I do get the bank to accept the property sale at $500k against the debt of $540k, and ask them to wear the loss of $40k, what could happen to my credit score? Michael

In terms of FICO scoring, a short sale would be treated almost the same as a foreclosure or a deed in lieu of foreclosure. If any balance and/or past due amounts are also being reported this will lower scores even more. In fact it can get even worse if the amount owed is high, the higher the balances the bigger the hit will be to your scores.