A short sale is the sale of a home for less than what is owed the lender. The bank (or other financial institution holding the loan) agrees to let the home be sold to a third party for less than the balance due on the note, and forgives the remainder of the debt.

A short sale candidate typically has little or no equity in their home. In many cases, the home may be “upside down”, meaning it is no longer considered worth what it once was, and the amount owed on it actually exceeds the home’s current value.

There will often be additional financial hardship involved in a short sale situation. Illness, loss of a job, divorce or other reasons for reduced income may prevent the homeowner from keeping up with payments. If the home is “upside down”, they cannot sell their home and pay off all of the outstanding debt against it.

People who qualify for a short sale typically fall into one (or more) of the following categories:

• The homeowner is behind on mortgage payments and sees no way to catch up due to changes in circumstances.
• The homeowner is not behind on mortgage payments, but will soon be and sees no way to avert the coming disaster.
• The homeowner is not behind on mortgage payments but must move due to job transfer, health reasons, divorce, retirement, military deployment, etc.

The best way to achieve a successful short sale is to consider this as an option before things become too dire. If a homeowner knows they will soon be 30+ days behind on their mortgage and other bills, and there is no reason to think finances will improve in the near future, seeking the advice of a short sale professional is probably a good idea.

A responsible short sale specialist can help with the process from beginning to end, starting with helping the homeowner to qualify, getting the hundreds of pages of paperwork in order, working with the lender to help settle on a price, and finding qualified buyers.

A homeowner who qualifies to take advantage of a short sale on an upside down mortgage can avoid the stress, shame and lasting damage done by a foreclosure, and have a better chance of owning a home again in the future.