What is a Short Sale in Real Estate

A short sale in real estate is when a financially distressed homeowner sells their property for less than the amount due on the mortgage. The buyer of the property is a third party (not the bank), and all proceeds from the sale go to the lender. The lender either forgives the difference or gets a deficiency judgment against the borrower requiring them to pay the lender all or part of the difference between the sale price and the original value of the mortgage. In some states, this difference must legally be forgiven in a short sale.


  • A short sale in real estate is one in which a house is sold for a price that is less than the amount still owed on the mortgage.
  • It is up to the mortgage lender to approve a short sale.
  • Sometimes the difference between the sale price and the mortgage amount is forgiven by the lender, but not always.
  • For the seller, the financial consequences of a short sale are less severe than those of a foreclosure.
  • For the buyer, it’s important to calculate costs and be sure that there is room for profit when the house is resold.

To learn more about a short sale call Results Realty at 630-632-9992