The real estate market has hit on some tough times. You may find yourself among the millions of homeowners who's homes have become more worrisome than happy. The short sale of a house is a method that can sometimes help people who are unable to make their monthly payments and need a way out. A short sale is an agreement by a lender to take less than the principal owed as payment on a loan. The advantage to the lender is that by doing this they can avoid the expense of foreclosure.

In order to be eligible for a short sale a borrower must prove that they are unable to pay their loan and that a foreclosure is pending. The borrower must find a buyer for their house at a price which is comparable to the market in the area. Then they must write an explanation of the situation. Financial information will be requested. Finally if the deal is accepted the lender will write off the unpaid debt. The borrower can later be taxed on this amount as income if no proof of insolvency is provided.

The laws that allow short sales to take place don't just benefit destitute homeowners. The short sale of houses creates a great opportunity for investors to get great house deals and make quite a bit of money.

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