In the event that you (the seller) have purchased, or refinanced the property in the last few years, you may have little to no equity in the house. This common situation will stop many investors from even making an offer on your house, because they don't believe there is enough equity in the deal to make it work.

There are however, investors that specialize in doing short sales. In this scenario, the seller is often several payments behind and may even be close to foreclosure, the seller can also show significant hardships that have led them to being unable to continue making payments on this property. The seller will give the short sale investor a contract to purchase the property, a deed that will probably be placed in escrow, power of attorney and a number of other documents that will give them full control of the property. The investor will then present a case to the bank holding the mortgage, that the seller is no longer able to make payments, is having to relinquish control of the property and that the loan on the property must be reduced in order for the investor to purchase the property.

These are not called short sales, because it takes a short time, in fact this kind of transaction can take months of waiting and negotiating between the bank and investor. This has been included as a method to sell your house quickly, because effectively you pass over control of your property to the short sale investor immediately upon signing of the documents. From that time on, it is up to the investor to complete the transaction. Should a bank refuse to accept the investors offer on a short sale, there is no guarantee that the house will not go to foreclosure anyway, but this does provide the seller a "possibility to avoid foreclosure", when all else has failed.




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