Sometimes lenders might be willing to take a loss through a short sale rather than go through a foreclosure, according to MoneyCentral.msn.com. You must demonstrate to the lender that you cannot handle your current mortgage payment. Let your lender know that if he does not agree to the short sale, he will have to foreclose, which most lenders do not want to have to do.

On the Other: No Guarantees

Just because you propose a short sale does not necessarily mean the lender will agree to it. According to real estate agent Stuart Wilson, writing for the MoneyCentral article, the short sale proposal is a "real crapshoot." The lender is usually anonymous and you don't know the particular reasons or guidelines the lender uses for approving or denying a short sale. In addition, if you have a second mortgage on the home with a different lender, you will have a poor chance of getting approval.

Bottom Line

Think about negotiating a short sale only if you are truly in a financial bind. Be able to prove that you can no longer afford your mortgage by providing documentation of your debts and proof of your income. For best results, it is a good idea to get professional help before approaching the lender.

Source:

MSN Money: Use a short sale to escape foreclosure

Business Week: The new exit strategy: A short sale