As with all things regarding real estate, even payoffs to banks in short sales are negotiable. Of course, the bank knows they hold the better hand and may even try to pressure you to give up rights and remedies you have under the law. Hopefully, your Realtor has done this before and knows how to hold out on the important issues.
That being said, most lenders will not negotiate regarding credit reporting. They will report that the debt was settle for less than the full amount owed. This single item will usually cost you 50-80 points on your credit. Unfortunately, in a short sale situation, the seller's hardship will usually result in missed mortgage payments and these have a separate negative affect on your credit.
No matter what the cost to your credit for a short sale, it is usually far better to negotiate a short sale than to allow a foreclosure. If you want more information on why, feel free to contact me or go to http://www.StopMyForeclosureHelpNow.com
for some great information and reports on the difference between a foreclosure and a short sale. Hope this helps and Dare to Dream.
Shel-lee Davis, CDPE
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty