Definition
Short Sale
A short sale is selling a home for less than the mortgage balance, with the lender's written agreement to accept the reduced payoff. It requires lender approval, takes months, and is a tool for owing more than the house is worth — not a fast-sale method.
Lenders approve short sales when the alternative — foreclosing and reselling — would likely net them less. The process involves a hardship package, an offer submitted for approval, and a wait commonly measured in months, with the lender free to counter or decline.
A short sale generally damages credit less than a completed foreclosure and can come with a waiver of the remaining debt (get that waiver in writing — deficiency rules vary by state). If the home has any equity at all, an ordinary sale is simpler, faster, and better.
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