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There seems to be a growing trend among home sellers that a short sale is a marketing technique to sell their homes and not the pre-foreclosure, last resort action that it is. I have a feeling that short sales are becoming so prevalent in the marketplace they are just being accepted as a way to sell your home, no strings attached!

I have been to a few sellers' homes lately and when I explain that they owe more for the home than I can sell it for, their response is "Just short-sell it". I ask "How far behind in your payments are you?" and they are current in their home with no late payments. I am not sure if they are understanding what short sales are all about.

The part that I don't think they understand is very simple: If you borrow $200,000 to buy a home, and the house sells for $150,000, you still owe the other $50,000. Its not like the lender is going to say "Don't worry, we know its a tough market and you don't have to pay the rest!" If you payback only $150,000 on a $200,000 loan, you still owe $50,000 and they will file a deficiency judgment against you. For the true short sale prospect that has lost their job and their ability to pay, this is a way to get out of the home and they don't usually have any other assets anyway or they would have already sold them to make the payments. But this new seller, who uses the short sale technique and owes this $50,000, this judgment can go against other assets you may have. So if you have other homes, a good income, cars, boats, or other assets, this judgment could attach itself to those. I think this is the part they are missing.

Remember, short sales are the way out for people who are forced with losing their home because they lost their income, or their payment went through the roof and they can't make it, or they had a medical or family emergency. It is not a technique for a seller who makes decent money and just wants a different home. Consider the ramifications of a short sale before you embark on that strategy.