How the seller of the property benefits is that he avoids foreclosure by selling prior to the foreclosure auction. The usual way of selling through a realtor would have brought in all lot of dough, but it is not an option since the seller has no money. How the lender benefits is that he gets most of his bad debt cleared. As per FDIC regulations, the amount of money a lender shows as delinquent loans, has a direct impact on how much money he can officially lend out as new loans, hence it is in his best interests to get rid of as many bad loans as possible. Also, putting up a home for auction is not such a hot idea as far as the lender is concerned, since he stands to lose as much as $35,000 to $50,000. Hence, a short sale works in favor of the lender, as much as it works for the seller.

        Investors win too, since they can make a profit on the home, usually somewhere between $25,000 and $200,000. Also, an investor does not need to make payments on the house, or spend on repairs, or have to put his credit on the line for doing this deal. For realtors, a short sale means an assured sale in today’s real estate market with little or no equity.