What is a short sale?

A short sale is a sale of real estate in which the sale proceeds are insufficient to satisfy the mortgage debt. For example, if a property is sold for $100,000 but $150,000 is mowed on the mortgage, obviously the sale will not generate proceeds sufficient to pay the mortgage debt. The mortgage lender will sometimes accept less than the full amount owed and satisfy the mortgage on the property for the purposes of allowing the borrower to sell the property.