A short sale is the sale of a real estate property for which the lender is willing to accept less than the amount still owed on the mortgage.
For a sale to be considered a short sale, these two things must be true:
The homeowner must be so far behind on payments that they can’t catch up.
The housing market must have gone down so much that the house is worth less than the remaining balance on the mortgage.
In most cases, the lender (and the homeowner) will try a short sale process in order to avoid foreclosure.
Overall, there are a lot of misunderstandings around short sales. But one common misconception is that lenders just want to be rid of the property and will move quickly to get as much money back as possible.
In reality, the lender will take their time to recover as much of their loss as they can. Here’s the thing: Just because a property is listed as a short sale does not mean the lender has to accept your offer, even if the seller accepts it.
This is what makes the short sale process so tricky.