"Short sale" is a hot buzz phrase.

Some sellers who decide that their home won't sell at the price they had imagined often start to wonder if they should let their home go to foreclosure.  They often feel they have no other option.  However, there is another option... a short sale. Here's some information you should know if you are considering a short sale...

What is a Short Sale?

A short sale happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. For example, if your mortgage is $200,000, but your home is worth, say, $180,000, you are $20,000 short, not including costs to close the sale such as commissions, recording fees or title and escrow charges.

Sometimes, to avoid going through the costs of foreclosure, a lender will sanction a short sale by letting a buyer purchase the home for less than the mortgage balance while the home is in pre-foreclosure stage.

Here are sample steps of a short sale:

• Seller signs a listing agreement with a Realtor
  
• The Realtor finds a buyer who makes an offer for less than the amount of the mortgage.
  
• Seller accepts the buyer's purchase offer.
   
• Seller's Realtor works to negotiate the deal with the bank and the bank's asset managers.
  
• Seller's lender accepts the buyer's purchase offer for less than the home is worth.
   
• Transaction closes when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.