In fact, the couple wanted the home so much they offered to pay $4,000 above the asking price of $215,000 and even offered to pay the seller's portion of closing costs.

But four months after making an offer, the Merryweathers have nearly given up on ever owning the property, one of a growing number of Wasatch Front homes mired in the web of short sales.

"It's definitely a property worth waiting for, but at this point, we're nearly ready to move on," Cindy Merryweather said. "We're staying totally clear of short sales now."

Short sales, which also have their supporters, are transactions that start with a seller who is behind on mortgage payments but can't find a buyer willing to pay enough money for the home to cover mortgage obligations. More common in soft real estate markets, short sales start to proliferate when home sales and prices begin to stagnate or fall, as they have in many areas along the Wasatch Front.

Mary Olsen, a Realtor with Keller Williams Realty in Riverton, said there are about 400 short-sale listings in Salt Lake County alone, up from about 120 at around the same time last year.

Many sellers, she said, are people who bought investment properties at the height of the market and had hoped to sell them at a profit in a short amount of time.

Rather than let their properties fall into foreclosure and simply abandon their homes, sellers can try to convince their lenders to accept less than they are owed in order to get the property sold. Such deals can benefit sellers by allowing them to avoid foreclosure, as well as buyers, who can purchase a home at a good price.

Short sales also can be beneficial for lenders because they typically result in losses of just under 20 percent of the loan amount, compared with losses of 40 percent for homes that are sold after foreclosure. This is according to a recent analysis by Clayton Holdings Inc., which tracks more than $500 billion in mortgage loans monthly for investors.

That's because the costs of foreclosure can include not only legal fees, but also taxes, insurance and the expense of maintaining the home until the property is sold. Also, there could be costs for repairing property damage that sometimes occurs when a homeowner is kicked out in a foreclosure situation.

The short side of short sales, however, is that they can be extremely difficult to complete and require months and months of delays because a third party - a mortgage company - must approve every aspect of the deal, including the sales price.

In addition, different mortgage companies handle short sales in different ways. Some, for example, won't even consider letting their borrower participate in a short sale until they are two months behind on a loan. In other cases, a borrower can be in dire financial straits but still current on payments.

Complicating matters are the large numbers of loans that involve two different mortgage companies, one of which holds the first mortgage, and one that holds a home equity, or second mortgage.

"You're dealing with two separate mortgage companies, both of which want to lose as little as possible," said Glen Ogden, vice president of The Mortgage Co-Op, a Sandy mortgage company.

He said that in some cases a lender might crunch numbers and believe less money will be lost if the property falls into foreclosure.

"Usually you lose less money on a short sale," said Ogden, past president of the Utah Mortgage Lenders Association. In fact, he said he's always lost more when a loan in his portfolio has gone into foreclosure, compared with a short sale.

Another complicating factor is who holds the mortgage. If the loan is in a bank or mortgage company's portfolio, they have more power to approve a short sale in a timely manner.

If the loan has been sold on the secondary market and is in a pool of mortgages, there are more steps required for approval.

Dealing with a company that is simply servicing a loan is more difficult and time consuming than dealing with a company that actually owns the loan as an asset.

That's why a buyer in a short sale situation might wait months before an offer is accepted instead of hearing back right away.

Or the buyer could wait that long only to learn the offer was rejected.

Real estate agent Debra McKowen, who is working with the Merryweathers, said she warns potential buyers of the pitfalls if they are interested in a short-sale property.

One of her first warnings - you aren't going to get the property "with a low-ball offer."

That's because a lender wants to minimize losses and get the best possible price, just as a typical seller would.

McKowen contends that if lenders were more flexible and worked more quickly with borrowers behind on their mortgages, there would be fewer foreclosures, and real estate markets would be in better shape.

Part of the problem in getting short sales approved today might stem from the fact that mortgage companies nationally are overwhelmed with borrowers who can't make their payments.

But help may be on the way. Fannie Mae and Freddie Mac, which own or guarantee nearly half of all outstanding U.S. mortgages, are trying to streamline the short-sale process.

Ogden said odds are good there will be more short sales on the market in the coming months.

"I want to say our market is leveling off, but reality tells me we haven't bottomed out yet."

lesley@sltrib.com

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* THE WALL STREET

JOURNAL contributed to this story.

ADVICE FOR SELLERS

* If you are in financial trouble, call your lender and see if it will do a "loan modification." Lenders can modify mortgage terms to lower monthly payments, including lowering the interest rate or extending the term.

* If that doesn't help, pursue other options, including a short sale, in which you convince the lender to accept less than is owed in order to get the property sold.

* Never sign over your deed to anyone who promises to help get out of your financial situation. If you do, the loan will still be in your name but you won't have any rights to your property.

* Lenders nationally are overwhelmed by people who can't pay their mortgages. Sellers have to be persistent in supplying lenders with what they are requesting and following up.

ADVICE FOR BUYERS

* Find out what fair-market value is on a property based on selling prices for similar homes in the area, and make an offer.

* Insist on seeing the interior of a property, which can be more difficult in a short-sale situation, but not impossible.

* Get pre-approved for a loan. Banks don't like to see an offer contingent on the buyer getting a loan or selling an existing home.

* Be patient. A short sale does not mean a short amount of time. It could take months before you know if your offer was approved.

* Be wary. Homes involved in a short sale are sold as-is. An inspection might be even more important in a short sale than with a traditional home sale.

Source: Mary Olsen, Keller Williams Realty, Riverton