The right time to start a short sale is when you know you will be going delinquent on your mortgage. Your Realtor will price it right to sell. Remember if the home is in good condition and shows well you should have no problem getting a contract.... more
Smurfs aside :>) , a short sale does indeed occur when the mortgage holder lets a homeowner sell a home for less than the full mortgage amount. Generally the home seller must prove that the financial burden of owning the home has become a problem. The bank will want to see pay stubs, tax returns, and other documentation. On some occasions, the mortgage holder will take the proceeds of the short sale as payment in full. However, lenders do sometimes require that all or some of the "deficiency" be repaid by the seller through an unsecured loan. A short sale does damage the home seller's credit score. Obtaining another mortgage loan will probably be out of the question for several years.
Lenders often agree to short sales because they cost the lender less than foreclosing.
Prudential Real Estate of the Rockies
The best time to start a short sale is after you have discussed modification options with your lender. If they determine that you cannot qualify for a loan mod then you can list the home for a short sale.
If you go to NPHSrealestate.org
Neighborhood Partnership Housing Services can give you assistance and see if you can be approved for a modification. If not, then you find an agent to list the home for you.