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In real estate a short sale is a property that sells for less than the balance owing on its mortgage. Not all properties qualify for this option and not all banks will grant short sales on property. If selling the property in this manner will make more money for the bank than foreclosing on the home then it is to the bank's advantage to make this negotiation. These sales are not restricted to homes with mortgages but will also apply to apartment buildings, farms and empty lots. Anything that has a mortgage can be sold in this manner.
For the person wanting to make a purchase of a hardship property it is best to work with a qualified real estate agent who has successfully closed on these foreclosures inclined properties in the past. An experienced agent is less likely to waste the buyer's time or the bank's time by offering ridiculously low offers or failing to take care of details like qualifying the seller and buyer in advance.
Properties that are good candidates to be purchased at less than their mortgage may have one of several qualifying traits. The property may be "underwater", that is, what is owed on the home is less than the actual value of the mortgage. There is no point in a bank or lender continuing to hold on to a property like that. Of course, the bank that holds the mortgage must be willing to participate in this form of discounting. Another necessity to make this type of sale work is that the seller must have some form of hardship. That could be lack of income, or failing health or some other reason that they cannot fulfill the original mortgage agreement. Finally, there must be a willing buyer to complete the transaction and purchase the property.
A short sale property needs to be successfully marketed. Pictures and open times for showings go a long way toward getting the exposure needed for qualified offers on the property. An experienced agent and possibly a lawyer are the professionals who can put all the pieces together.
If you are an investor or buyer wanting to find the best value for your money, consult the professionals and then be realistic in what you are offering. Seek out lenders who are open to the idea of moving a problematic property with satisfactory concessions for all parties involved.