In today’s world, where foreclosures are one of the most talked about subjects of the existing economic crisis, almost everyone has heard of the term “short sale”. Don’t feel bad if you don’t understand exactly what that is or how it is accomplished. Many professional Realtors don’t understand the complexities of a short sale. We buy houses that are prime candidates for short sales. If you owe more on your home to a lender, and perhaps secondary lien holders, than your house is worth, then you should seriously explore the possibility of a short sale. Here is the beginner’s guide to selling your home for less than you owe.

If you can’t make your mortgage payments, or foresee a time in the near future when that will be the case, you probably need to sell your house fast. Before foreclosure becomes inevitable, explore a short sale. This is a business decision that a lender will typically agree to if they see that you will be unable to sell your house and they can get no recourse from you. Banks and mortgage companies are not in the business of owning and selling real estate. They do not want the expenses involved with owning and marketing a property after foreclosure. If their loss mitigation department understands this, then agreeing to a short sale is faster and will cost them less money in the future.

Seek out companies or individuals experienced in buying homes through the short sale process. These companies exist in all states and are highly active in the Philadelphia area. Some of these short sale home buyers are interested in purchasing your home for investment purposes and others are real estate companies with individuals looking to buy a house for less than the current fair market value. The first things to be determined are what your home with its amenities and condition factored in, will actually sell for in today’s market based on recent closed sales in your neighborhood.

Once you have obtained that information, the party wanting to purchase or sell your home is armed to negotiate with your lender. The object of the game is to see how much of your loan the lender will forgive in order to let a cash buyer want to actually purchase the home. How much will the lender have to give up now to avoid further headaches and loss in relation to your property. The benefit for you as the seller is that you don’t have a foreclosure on your credit report. The short sale will show up, but it is much less damaging, and you should be able to walk away with no debt.

Short sales are not easy and the entity purchasing your house will be involved in long negotiations with the lender trying to hammer out all of the details. Since banks and mortgage companies are already on overload, they need to be convinced as to why they should agree to forgive part of your mortgage now to allow someone else to buy your property. They will want their own appraisal as well as verification of as many facts regarding your situation as possible. Finally, they must be convinced that the “bird in the hand” phrase definitely applies to your situation so that they agree to sign off on the negotiated terms of a short sale on your property. This takes time and sometimes may not actually happen. When it can be successfully completed however, it is an excellent way to negate credit damage to the seller and to allow a buyer to purchase your home below market value.