A short sale is a pre-foreclosure sale where the homeowners attempt to sell their home for less money than they owe to the bank in hopes that the bank will forgive their debt. This situation is quite common in today’s market because prices of homes have fallen from the 2005 & 2006 market highs. Homeowners who bought during the market high, or who took out a 2nd mortgage based on the 2005 & 2006 market value of their home will owe more for their home than it is worth in today’s market. If they were to sell at today’s market price, they would have to come to the closing table with a significant amount of money to make up the difference. For this reason, they will ask the bank to accept an amount ‘short’ of what they owe; hence the name “Short Sale”.

Read more about short sale homes here.