If you are one of the many homeowners who have fallen behind on your mortgage payments and you don't see any way to avoid foreclosure, a short sale may offer you the least painful way to resolve the situation.

Obviously, the ideal scenario would be that you magically catch up on your mortgage payments and keep your home. But for an increasing number of Americans, that is not a realistic possibility, so it's to your advantage to take an active role. This is what a short sale is all about -- resolving the problem, as opposed to simply hiding from your lender and hoping the issue will go away or, worse, walking away from the property.

What is a short sale?

A short sale is when a lender agrees to accept a mortgage payoff amount less than what is owed in order to facilitate a sale of the home by a financially distressed owner. The lender forgives the remaining balance of the loan.

What’s in it for the seller?

Because you are making a good faith effort, the lender may look more favorably on you, and perhaps be willing to help minimize the damage to your credit score. You are also spared the stress and embarrassment of a long drawn-out foreclosure process.

That's may allow you to feel more in control and that you have a more direct role in paying off part of the debt. Remember, too, that every short sale is a negotiated agreement between the owner and the lender. In a foreclosure, the lender can always pursue the seller for a deficiency judgment to recoup the difference between what it was owed and what it actually collected. In a short sale you may be able to get the lender to accept the sale as "payment in full without pursuit of any deficiency judgment." The lender might agree to that release in return for the seller showing the home, maintaining it as well as possible and not trashing it on the way out.

The lender’s motivation:

Why would your lender let you walk away from the home and forgive the shortfall on your loan? To save time and money. Foreclosures are expensive and time-consuming for lenders. Once the lender realizes that a foreclosure is inevitable, a short sale may seem like the lesser of two evils. Plus, short sales help the lender look good on paper -- the property was never listed as an actual foreclosure, which helps the lender's numbers.

Finding a Short Sale Listing Specialist

Many things can go wrong with a short sale listing, however, an inexperienced agent is probably on top of the list. It is important that you interview and select the right real estate agent for the job. Many agents who think a short sale listing is “normal” real estate is not the right agent for you. The short sale market conditions are constantly changing. You want someone who has short sale experience and has invested in additional training, and certification to handle your short sale property. Contact Tom Today!

**Nothing is this article should be construed as legal or financial advice. For legal/financial questions, seek a the advice of a professional advisor.