Short sales in real estate have become more common in the past few years as a result of the collapsing value of houses. It is an option for a homeowner facing foreclosure. In a short sale, the lender or mortgage holder will agree to accept less than the full amount due on the mortgage if the homeowner is able to sell the property at fair market value.

There are criteria that must be met for a short sale. The first is that the value of the home has dropped. A real estate agent can verify this through an analysis of comparable homes in the neighbourhood and their recent sales amounts. The mortgage must also be in default. Some lenders will consider a short sale if it appears that the property may go into default. This move could avoid the lengthy process of foreclosure. The homeowner must demonstrate that he/she has become insolvent; the prospect of continuing to pay the mortgage is unlikely, and there are no assets to cover the shortfall…