A "short sale" simply stated is when you need to sell your property and the sales price is not sufficient to pay all existing lien holders and closing costs. This occurs many times due to a loss of income, a rise in expenses, medical issues, death, divorce and many other reasons. Lately, attorney's, accountants, and financial advisor's have begun to advise their clients to short sell their homes because they are so upside down it does not make financial sense to keep the property.
A short sale works very similarly to a traditional sale except for one part. After the offer is received on the property, a "short sale package" is submitted to the lender with a request for short pay off. This crucial step can take anywhere from ten days to more than a year. Once the short sale is approved, escrow continues normally until the close of escrow occurs and ownership changes hands.