So, what is a short sale?

A short sale is when the sellers lender/bank or primary lean holder is willing to cut their losses on the mortgage that they hold in lieu of foreclosure. In order for this to happen the seller must be in default on mortgage payments. The banks loss mitigator will possibly negotiate a lesser amount to pay off the mortgage instead of foreclosing. If the bank forecloses they risk losing even more money than if they agree to sell at "short sale" terms. However, even though a home is listed under "short sale" terms does not mean they (the lender) will accept your offer, even IF the seller has agreed to it..

What if there are 2 loans on the property. Better known as a 1st and a 2nd mortgage?

In this case, you will most likely deal with the second lien holder because the first lenders position is protected by the second lenders lien unless, the second mortgage company does not want to foreclose. So, if a seller owes 200k to the first lender and 50k to the second lender then you can not offer 200k because it will wipe out the second lenders lien. So be sure to check public records.

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