Short Sale is selling a property by the home owner against his outstanding dues as against bankruptcy and foreclosure proceedings. Home owners who are incapable to pay back the mortgage loan on the property sells the property less than the outstanding loan and the entire dealings goes towards the repayment of loan to the lender or the bank. Here the mortgage lender or the bank agrees to lowers the balance loan amount due for repay by the seller due to the monetary hardship.

Once the minimal loss is calculated by the lender or the bank against the outstanding dues then a property can qualify for short sale. But the deal of property proceedings is entirely to the approval of the bank or the lender. They can approve or disapprove short sale according to the settlement they will get on the deal. This is mostly because the lender feels that although there is no other option for the owner to repay his dues due to his financial problem but still the money from the deal is a marginal loss as compared to the outstanding dues of the home owner. And moreover all the money in the transaction is paid towards the outstanding debt of the seller.

Short sale is considered to be much better decision for owners in monetary crises. Here unlike the bankruptcy you do not have to spend extra money for purchasing property like in case of high interest loan and big down payments. But still one has to keep in mind that short sale will affect the credit report too. But still owners prefer this decision.

All property or seller do not always qualify for short sale. All lenders and bank have different set of criteria that needs to be fulfilled first. Here are some examples for short sale conditions. First, the home owner is unable to repay the loan further due to monetary hardships. But cases like moving out, miserable neighbors or wrong buying decision does not count in monetary hardships. Secondly, the price of the house is less that the loan amount. Thirdly, the seller does not have any other asset. Fourth, the outstanding loan is in or near in default. Sometimes in current also the bank might consider short sale if the value of the property has depreciated than the market value.

Even if you fulfill all the conditions there are chances that you may still not qualify for a short sale. You should have a buyer whose offer is accepted by the third party, the lender or the bank. Also as a short sale seller your credit report is also going to be affected.

As a short sale buyer few things must always be considered like finding out the total outstanding amount the seller owes to the bank helps you quote the right offer so that it is approved by the lender and also it is not overpriced. But approval might take months. Also checkout if the existing seller is in default or not because you do not want to make any investments with any extra expense in the future.

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