In a short sale the lender receives a relatively high price for a fast property sale. The borrower protects their credit. They also generally avoid possible future deficiency judgments and legal action. Both the lender and the homeowner win in a Short Sale.

When a borrower sells their property for a sales price less than the amount which they owe the lender less sales expenses and fees, this is know as a Short Sale. The lender must accept a discounted payoff amount in order for a Short Sale to take place. This means that the bank(s) get receive less than the full loan amount owed. The homeowner is relieved of the full debt of the mortgage.

The ultimate outcome of a short sale is that the mortgage is paid off, the house is sold and the borrower avoid foreclosure and possible bankruptcy. The borrower typically receives an immediate improvement in their credit rating due to the mortgage being paid in full.