When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sale.Please consider the following to determine whether you may qualify for a short sale.

The Home's Market Value Has Dropped. Hard comparable sales must substantiate that the home is worth less than the unpaid balance due the lender. This unpaid balance may include a prepayment penalty.

The Mortgage is in or Near Default Status. It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass.

The Seller Has Fallen on Hard Times. The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments. Examples of hardship are: Unemployment; Divorce; Medical emergency/sudden illness; Bankruptcy; Death. A few examples that DO NOT constitute a hardship are: Bad purchase decisions; Unhappy with the neighbors; Buying another home; Moving into an apartment.

The Seller Has No Assets. The lender will want to see a copy of the seller's tax returns and/or a financial statement. If the lender discovers assets, the lender may not grant the short sale because the lender will feel that the seller has the ability to pay the shorted difference. Sellers with assets may still be granted a short sale but could be required to pay back the shortfall.

A short sale is also dependent on a buyer making an offer to purchase. If you do not receive an offer, you will not qualify for a short sale. So even if you meet all the other criteria, it is possible that no one will buy the short sale. It is also dependent on the lender accepting the buyer's offer. If the lender rejects the offer, a short sale will not take place.

If the lender agrees to the short sale, the lender may possess the right to issue you a 1099 for the shorted difference, due to a provision in the IRS code about debt forgiveness. Many situations are exempt from debt forgiveness, according to the Mortgage Forgiveness Debt Relief Act of 2007. You should speak to a real estate lawyer and a tax accountant to determine the amount of short sale tax consequences, and whether you can afford to pay those taxes, if any. Always seek legal counsel before attempting to pursue a short sale. A real estate agent cannot give you legal advice.

Short Sale is a very complicated and time consuming process of helping delinquent homeowners, in or close to foreclosure. Every homeowner's situation is unique and each lender has their own policies and procedures regarding Short Sale. Our extensive experience and solid working relationships with the Banks and Mortgage Lenders allow us help you to avoid the common pitfalls that many homeowners encounter while trying to work things out directly with their lender. After performing a thorough assessment of your personal finances and current situation we will contact your lender in order to negotiate the best possible solution for you.