I'm often asked by buyers and sellers what a short sale means. This is the shortest and most understanding description I have come across as explained by PAUL D. BOJIC, ESQ.

The Short Sale Process

A "short sale" occurs when a borrower is insolvent and a foreclosure by the lender will cost more than allowing the short sale. There are certain requirements which must exist in order for the lender to allow a Short Sale inclusive of, but not limited to: the property was purchased at the top of the real estate cycle and its value has declined; the property was refinanced at an LTV substantially higher than its present value; the property is located in an area where property values have decreased dramatically; the property's condition has declined and it is not financially feasible to foreclose and remarket the property; the proposed purchase price is more than the lender would be able to sell the property for after foreclosing on the loan; and, the commission the lender would pay is less than they would pay to sell the property after foreclosing on the same.

In addition, there are certain requirements which must exist with the borrower in order for the lender to allow the Short Sale inclusive of, but not limited to: the borrower or family member has an illness that has depleted their savings; the borrower's spouse died or divorce occurred and they have become insolvent; the borrower's employer transferred them and they cannot sell the property; the borrower is on active military duty and cannot make their payments; the borrower has suffered a disabling injury that prevents them from working; the borrower is unemployed and will not find employment in the foreseeable future; the borrower is financially insolvent; and, the borrower has been incarcerated and can no longer make their loan payments.

Without question, short sales are difficult transactions to complete.  Sellers will want to use a real estate agent experienced and well qualified to deal with the short sale.