What's a Short Sale? Though the circumstance has been around for quite a while, lately it has been getting lots of press. 

A short sale is a transaction in which the home seller's proceeds cannot cover the mortgage(s), liens and closing costs.  Basically, a short sale means that the amount of the seller's mortgage is more than the market value of the home.  Because the payoff will be less than the seller owes, the lender(s) will have to approve any repayment.

A seller may consider a short sale if they have missed payments and could be at risk of foreclosure. The short sale scenario may be created by job loss, divorce, medical bills, interest rate changes, relocation, and/or depreciation. A seller does NOT have to wait to have missed payments to approach the lender(s) and ask about a short sale.

Before proceeding with a short sale , a seller should (1) decide if they really need to sell, (2) check to see if they are eligible for a federal program or (3) whether their lender will consider loan modication.   Many attorneys have a short sale department to determine whether the homeowner is a good candidate.  A bank can spend thousands of dollars to accomplish a foreclosure including attorney fees, public notice, court costs, assessments, etc.  The State of South Carolina requires a waiting period of six months before the bank can proceed with a foreclosure; and, the lender must prove that the homeowner is not eligible for one of the federal bailout programs.  Thus the short sale has become a viable option.

If you think that you may need to consider a short sale, be sure that the agent you choose is familiar with short sales. It takes tremendous organizational skills and time to properly represent the seller. Each lender has different information needs for a short sale relative to receipt of financial statements, bank statements, income tax returns, etc. An agent with experience in short sales will increase the chances of a successful transaction. .