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A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan.^[1] It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.^[2]

^{The last part of that definition is very important and can be make or break in any short sale. Most short sales can sit on the market and end up being sold at a sheriffs auction without the Realtor ever really knowing. Its is important for the seller to write a letter to the bank or lender giving the realtor permission to negotiate and communicate on behalf of the seller. The first most important thing to get from a lender in a short sale is a short sale approval letter from the lender. It is exactly what it sounds like, the letter states that the lender has approved the short sale and the purchase price which the buyer is willing to pay. The deficiency is another story either the bank is releasing the seller from any obligation to have to repay the remaining balance or there will be an agreement for the seller to repay the portion that is not being paid by the new buyer. In most cases the seller is still going to end up with a judgment on their record or credit however it is far better than a full blown foreclosure.}

^{A short sale can be a great buy however the buyer usually has to pay their own closing costs and make all the repairs since the seller has no money to really bring to closing or make any kind of concessions.}