What is a Short Sale?

The role of each party involved in a real estate short sale process

The Homeowner(s)

In a real estate short sale situation, a homeowner owes the mortgage company more than his house is worth. The homeowner cannot afford to keep up with the mortgage payment because of reasons such as loss of job, excessive medical bills, etc. The homeowner then seeks to move out of the house he or she cannot afford into a house with smaller monthly payments.

However, since his or her house is not worth as much as the mortgage balance, if he or she sells his or her house in the real estate market, he or she will not have enough money to pay the mortgage or mortgages off.

The home buyer or real estate investor

In a real estate short sale process, the home buyer or real estate investor is the party that is interested in buying the home from the homeowner and is willing to talk to the mortgage company on behalf of the homeowner.

The mortgage company and its short sale officer

The last party in a real estate short sale process is the bank, mortgage company or the financial institution that holds the mortgage on the homeowner's house.