A short sale occurs when you are able to sell your property and convince your lender to accept a payoff on your loan of less than the amount you actually owe. Short sales are often considered by owners of property considered to be “underwater”. This means that you owe more on your loan than your property is presently worth.
Typically, if your lender will agree to take less than is owed and you are able to find a buyer to purchase for such lesser amount, a short sale may be approved.
It is wise to have legal counsel assist you in dealing with your lender, real estate brokers, the buyer as well as title and escrow. You also need to be aware of potential serious tax consequences that could result if this matter is not handled properly.