A Short Sale may assist a homeowner prior to the Foreclosure process.

If the proceeds from the sale of a house fall short of the owner's existing mortgage balance, a lender may agree to accept the proceeds of a short sale in lieu of the total obligation due on the mortgage.

By accepting a short sale, a lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes.

Opinions differ in the real estate industry, but most experts suggest that you should let the lender involved know as soon as possible of a potential short sale. Others say you should wait until you have an offer because the bank will not consider your request until then.

If a lender is approached before the property is listed, they may want to get a broker's price opinion (BPO) or even an appraisal to see what the property is worth before a list price is set. One way to help ensure that the bank's estimate of value is realistic is to offer comps of recent sales, both traditional residential and foreclosed residential, if available.

If a short sale is being negotiated once an offer is received on a home that is listed, you will have to provide hard numbers to show that the amount of money a bank will realize on the short sale is better than the amount it may recover from foreclosing on the property and selling the property as an real estate owned property (REO).

When you have a written purchase agreement, your request may have a better chance of having the bank's asset manager or loss mitigation department review your proposal for a short sale.

Although response times vary from lender to lender, it can take two weeks or as long as 60 days to receive an approval of a short sale from a lender. That's why it's critical that buyers and their representative understand and accept that time frame before they make an offer.

Check with a real estate professional to determine whether your home and circumstances will qualify for a short sale. The final decision is up to the lender.