What is a short sale?

How a short sale actually works

Your home is listed for sale at its current market value, even though that value is below your mortgage balance. When a qualified buyer makes an offer, the offer is submitted to your lender along with a hardship package. The lender reviews everything and decides whether to approve the sale at the reduced amount.

If the lender approves, the sale closes and the mortgage is settled at the negotiated amount. In many cases the deficiency — the difference between what you owed and what the lender accepted — is forgiven, but that depends entirely on your lender and your specific approval.

What you typically need

• A documented hardship (job loss, divorce, medical, payment increase, rental issues, etc.)
• A hardship letter explaining your situation
• Recent pay stubs, tax returns, and bank statements
• A current mortgage statement and any default notices
• A market-priced listing and a qualified buyer offer

Why homeowners choose a short sale over foreclosure

A short sale typically gives you more control over the timeline, often does less damage to your credit than a completed foreclosure, and lets you close the chapter on terms you helped negotiate. It is also a more dignified path forward for most families.

It's not automatic and it's not simple. But with the right help, it's very doable.