If you’re shopping for a home, you’ll probably come across at least one property that’s listed as a short sale.
Many buyers are unfamiliar with this term and don’t know how a short sale works.
To understand the process, you have to understand the situation that the seller and the seller’s lender are in.
A short sale occurs when a lender allows a delinquent borrower to
sell her home for less than she owes on the mortgage because the home is
now worth less than what she originally paid.
A homeowner might want to do a short sale because he can no longer
afford the mortgage payments and wants to avoid foreclosure (both have
credit score implications).
Lenders might prefer a short sale to a foreclosure.
Read more in my Mortgage-calc.com article, What is a short sale and how does it differ from a foreclosure?