As the other answers note, the most common methods are: (1) short sale or (2) have the seller prepared to bring a check to closing for the balance owed.

There are several other techniques that investors use, but Realtors (for various reasons) aren't enthusiastic with them. In brief:

Subject To: The property is sold "subject to" the existing loan. Essentially, it's like the new buyer assuming a loan when it isn't assumable. This strategy violates the lender's "due on sale clause" but--especially in today's market--lenders usually are happy enough just to have the mortgage payments made on time.

Land Trust: There's a strategy used by some investors (real estate "guru" Bill Gatten refined the idea) in which the property is moved into a land trust. The buyer pays the full amount every month to the trustee (the owner), and the trustee disburses the money to the lender, taxing authority, etc. OR--the buyer may pay less than the full amount, with the seller kicking in a portion (maybe a few hundred dollars) every month. At some point, the property is brought out of the trust and sold, with the "buyer" having the first right to buy. For more information, go to http://www.landtrust.net

Hope that helps.

Hi Vivian,

It's so difficult when a homeowner wants to sell, and realizes the market condtions are such that they have no equity. In the Northern Virginia area, that is the norm here. So many are under water. Back in the late 1980's and early 90's when the Real Estate Market corrected, people had to make hard choices.
Sell and bring a check to the table ( back then no one bailed anyone out!) I saw people write $10,000, $20,000 even $30,000. Sellers had options. Rent, Sell and write a check or Do Nothing and Knuckle Down and pay the mortgage. However our current real estate market is not like anything I've ever seen in my 20 years selling Real Estate. There are so many folks with such compelling needs to sell by short sale.

First off figure out how much the short fall will be.Then have the seller authorize you as a someone who can talk to the mortgage company on their behalf. Vivian the process is very much like the process of getting a loan only backwards.Except in this scenerio the Listing Agent does he marketing, the selling, the processing ( the actuall gathering and organizing the short sale package for the lender) and then monitors the process and responds accordingly to what the homeowners lender needs from the distressed borrower.

I've written quite a bit about my short sale experiences with helping Home Sellers and Home Buyers in the Prince William County Area of Virginia and you and the consumer may pick up some good tips from these posts.

Vivian,
We certainly have seen that a lot over the past few years with the falling prices/values. We have a lot of sellers having to bring money to the closing table. If the sellers don't have the money to bring to the closing table then a short sale is done. We have a company that we work with for our short sales, it makes the process easier for the seller, the buyer, and the agents. Hope that helps.