It’s been called a “short sale” for a long time however it has become a well know term in the last few years. A short sale allows the seller of a property that owes more than it’s worth, and doesn’t have the funds to pay the difference, to sell the property with the approval of the bank or mortgage holder. The bank will discount the note allowing the seller to negotiate a price lower than the balance of the loan. They are usually willing to do this when the cost of the discount and associated expenses are less than the cost of foreclosure Proceedings.
Banks have been doing this for years however in the past few years they have by necessity gotten pretty good at it. Although it depends on a variety of factors the completion of a successful short sale can take between 60 and 180 days. In addition the seller will need to “qualify” for the short sale.
Typically the seller must be in a hardship and will need to provide the supporting documentation and application. In this stressful time sensitive situation it recommended that the seller have professional help. There are consequences to selling short and you should be aware of them before attempting it.
Resources that may help avoid a short sale or foreclosure: