Short sales are the order of the day in Rhode Island. If you don't know what a short sale is and sell real estate you won't be in business long. Of the 5 pending deals this month, 4 are short sales. Sellers have borrowed against equity in thier homes that has gone away. Selling a home for less than what is owed to the bank is called a short sale. The simple types are single mortages losing 5-10% of whats owed. Banks agree to take less money, its that simple. Here is where is gets complex. If you have a first and a second, the mortgage holder of the second may not get anything with a low offer. On some deals the first mortgage holder will offer a small amount to get the secong to sign off. In all cases I recommend a real estate agent that handles short sales often. They should also employ the services of a negotiator(attorney usually).