A short sale is the sale of a real estate property for which the lender is willing to accept less than the amount still owed on the mortgage. The lender agrees to allow the property to be sold for less than the loan amount, releasing the homeowner from the debt.

The three primary parties involved in a short sale transaction are 1) the lender servicing the note,  2) the homeowner requesting a short sale of their property, and 3) the buyer of the property.  Additional parties include agents representing buyers and sellers, escrow companies, insurance companies, and lenders providing mortgage for the new buyer. .

A foreclosure is the process utilized by lenders to seize a real estate asset if the borrower is delinquent on payments.  This process is begun with the issuance of a “Notice of Default” usually after a 90 day delinquency period.  A short sale process is initiated by the borrower to avoid foreclosure proceedings.

Documents required during a typical short sale transaction include (but are not limited to:

• An Executed Listing Agreement.
• Fully Executed Purchase Contract.
• Seller's Hardship Letter.
• Authorization Letter.
• Last Two Bank Statements.
• Tax Returns and Wage Documentation.
• A Closing Disclosure

Short sales are a great opportunity for agents because it gives you another avenue to help out your clients and produce income. When the real estate market has a down cycle, short sales and other distressed real estate becomes more prevalent. Understanding a short sale and perusing short sale opportunities allows agents to continue to thrive even when the market takes a shift.

Short sale negotiators work with the homeowner, the lender, and the real estate agent to get approval from the lender to allow you to do a short sale. They will put together all the documentation, create a plan, and “negotiate” on the seller’s behalf to get the deal done.