A short sale occurs when a lender agrees to take less than the amount that is owed on a piece of property.
The benefit of a short sale occurs when your net proceeds from a short sale are insufficient to cover your loan balance, but the lender agrees to take a lesser amount. A successful short sale includes the lender forgiving any remaining loan balance, and clearing you from any future contractual obligations to the lender.
Often homeowners will consider a short sale when their mortgage loan is underwater (the balance on your mortgage loan is higher than the current market value of your home), In most instances an underwater mortgage prevents the homeowner from selling or refinancing.
