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Many of the homes for sale today - as many as half in some markets - fall under the category of "distressed properties." These are homes that have either gone through foreclosure or are being marketed as "short sales." In a short sale, the homeowner can't afford to maintain the mortgage, but the lender - rather than foreclosing - agrees to the sale of the property for less than the balance of the loan. These types of sales have different dynamics than traditional sales - with more paperwork, often a longer transaction process and, in some cases, more frustration. For these reasons, many buyers shy away from foreclosures or short sales.However, if you understand the potential pitfalls of purchasing a distressed property - and work with an agent who has a thorough knowledge of this market - you can get a great home at a great price. Many agents have been specially trained in working with foreclosures or short sales through the Certified Distressed Property Expert

Short sales have become very common and can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. A number of myths have developed about short sales and it is important to understand the reality of this process if you are going to be dealing with a short sale in any way. Myth #1 – The Bank Would Rather Foreclose than Bother with a Short Sale This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. In more cases than not, banks receive more on their investment through a short sale than a foreclosure. Myth #2 – You Must Be Behind on Your Mortgage to Negotiate a Short Sale While this may have previously been the case, today lenders are looking for verifiable hardship, monthly c

People who have lost their homes through foreclosure (or short sales) or who have restructured their mortgage loans may qualify for tax relief under a new tax law, the Mortgage Forgiveness Debt Relief Act of 2007. Highlights of Mortgage Debt Relief: You may exclude up to $2 million of debt forgiven or canceled by a mortgage lender on a main home. Both mortgage restrucuring and foreclosures qualify Now available for the years 2007 through 2012. For more information, go to The Mortgage Forgiveness Debt Relief Act and Debt Cancellation .

On May 14, 2009, the Obama Administration announced its Foreclosure Alternatives Program (FAP) providing incentives and uniform procedures for short sales and deeds-in-lieu of foreclosure under the Making Home Affordable Program. The Making Home Affordable Program is designed to help homeowners obtain modifications to their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage a quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future. A uniform process for handling short sales and financial incentives should help facilitate this process. Click here to view a summary of the incentives and process.