What is a short sale?
A short sale is a sale where the lender agrees to accept less than the loan balance so the owner can sell before foreclosure. The lender must approve the price and terms, which can take weeks or months. Buyers get a normal purchase with inspections and financing, but on the lender's timeline.
Updated November 2026. A plain-language definition, not legal advice.
How it works
The owner lists the home and accepts an offer subject to lender approval. The listing agent then sends the offer, a hardship letter and financial documents to the lender.
The lender orders its own valuation and can approve, counter or reject. If there are two loans, both lenders have to agree.
What to watch
A short sale can still end in foreclosure if approval doesn't come before the sale date.
Ask whether the seller's lender has already reviewed a past offer. That can speed things up.
Questions people ask
What is a short sale?
A short sale is a sale where the lender agrees to accept less than the loan balance so the owner can sell before foreclosure. The lender must approve the price and terms, which can take weeks or months. Buyers get a normal purchase with inspections and financing, but on the lender's timeline.
Is a short sale better than foreclosure for the owner?
Many owners prefer it because they sell on their own terms and avoid a foreclosure sale. The effect on credit and any remaining debt depends on the lender's approval terms and state law, so owners should ask a HUD-approved housing counselor or attorney.
Related terms
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