What is a short sale?

The term "short sale" refers to a transaction where there are insufficient funds generated from the sale of the property to cover all the seller's closing costs, the payoff of existing loans and or liens of record, and the seler is not in a position to deposit funds to make up the shortage (difference). An existing lien holder that agrees to a short sale will typically take the sellers proceeds after payment of the costs of sale, as approved by that lien holder.