A short sale occurs when a lender agrees to accept a discounted payoff on the mortgage as an alternative to foreclosure. If the lender forecloses and takes the house back, they will most likely take a huge loss. I can often convince a lender they will do better if they take less than what is owed now, rather than foreclosing later.
For example: If the unpaid balance of a loan is $200,000, a property sells for $150,000, and there are $20,000 in closing costs, a short sale lender might accept a payoff of only $130,000.
In some cases, a second or even third mortgage may exist on a property. When this occurs, the process becomes much more complex. I will need to negotiate between the existing lenders as to the actual payoff amount they are willing to accept in relation to the other lenders. The important thing to remember is that negotiating with banks and lien holders is my specialty and I have a vast amount of experience and knowledge in this process!