A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of a hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department and our trained professional negotiators. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender.  

Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are legal and carrying costs that are associated with a foreclosure.. A short sale is typically faster and less expensive than a foreclosure.

In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount.