A short sale home is a home that is listed for sale at a price less than the owner owes on the mortgage. Short sales are generally agreed upon by both the home owner and the lender before the home is put on the market.
In a short sale, the lender agrees to accept a sale price lower than the mortgage balance in order to avoid the borrower going into foreclosure. This can be a benefit for the homeowner, as it allows him to not have the foreclosure on his credit reports. If there are multiple loans on a property, such as a first and second mortgage or home equity line of credit, all parties must agree to the terms of the short sale.
A consumer who is looking to list his home as a short sale must keep a few things in mind, one of which is that a hardship may increase the chances that the lender approves a short sale. So if an illness or other extenuating circumstances facilitate the need for a short sale, document that for the lender. Also, be prepared to share proof of income and any assets, as well as information showing that the value of the property has declined.