Is a 'Short Sale'
Right for You?

Question: I'm in the market to purchase a home, and my husband and I recently looked into a home in which the owner wants a short sale. What is a "short sale?" 

-- Sandra, Ojai, Calif.

Sandra: A "short sale" usually refers to a seller who is "upside down." That means the seller owes more on the home than its current market value. In order to sell the property, the mortgage company must be willing to accept less than the amount due, in other words be "shorted."

Usually these are difficult sales to consummate because the lender often is unwilling to accept less and has put the seller into foreclosure. They are further complicated because the seller, who has little to no equity at this stage, often refuses to admit it. Often the best the seller can hope to achieve out of the sale is the retention of his good credit.

However, if you're careful, you may be able to get into the house with little to nothing down, get a good mortgage from the lender and purchase at or below market value. 

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Tips and Traps When Building Your Own Home," (McGraw-Hill, 2000).

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