A short sale is when a homeowner sells their home for less than the amount they still owe on the mortgage, and the lender agrees to accept that lower payoff.

In simple terms:
The home is sold, but the sale price doesn’t fully cover the loan, so the bank has to approve the sale and forgive (or settle) the difference.

Short sales are usually done when a homeowner is having financial difficulty and wants to avoid foreclosure.
 
What do I need to do to apply for a short sale
 
To apply for a short sale, here’s what you generally need to do—nothing fancy, just step-by-step:

Contact your lender

Let your mortgage company know you’re experiencing financial hardship and want to pursue a short sale. They’ll confirm if you may qualify and explain their process.

Show financial hardship
You’ll need to explain why you can’t keep making payments. This usually includes:

-A hardship letter (job loss, medical bills, divorce, reduced income, etc.)
-Proof of income (pay stubs, tax returns)
-Bank statements
-Monthly expense breakdown

Hire a real estate agent experienced in short sales
The agent will price the home appropriately, list it, and communicate with the lender on your behalf. List and sell the home. Once you receive an offer, it’s submitted to the lender for approval. The bank—not the seller—has the final say on price and terms.

Wait for lender approval
The lender reviews the offer, orders their own valuation, and decides whether to approve the short sale.

Close the sale
If approved, you move forward to closing under the lender’s agreed terms.
Good to know:

-Short sales can take longer than a normal sale.
-You usually don’t receive proceeds from the sale.
-A short sale may affect your credit, but often less severely than a foreclosure.