A short sale is a real estate transaction where the owner of a property and the lender of a loan on that property agree to sell it for less than the amount owed. When an owner determines that maintaining payments on the loan are no longer feasible, they may appeal to the lender to sell the property via a short sale. The process of a short sale is similar to an ordinary real estate .
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However, a lender requires additional documentation before approving the transaction. The lender would prefer to receive their loan payment in full. If that is impossible, a short sale is preferable to a foreclosure since the lender receives at least some proceeds out of the transaction. One form of documentation a lender requires to approve a short sale is a hardship letter. An example can be found at http://www.themortgagehome.com/images/pdf/hardship-letter-sample-1.pdf
More Reference Links: http://www.knowyouroptions.com/options-to-leave-your-home/short-sale-option http://www.makinghomeaffordable.gov/learning-center/glossary/Pages/default.aspx
