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Definitions of Short Sale

A real estate sales transaction executed with the understanding that the seller will payoff their lender less than what is owed on the property.
The lender may choose to issue an IRS 1099-A form that shows the deficiency as income which the borrower may have to pay income taxes on. A short sale can help a homeowner prevent foreclosure. A homeowner can continue to live in the property during the short sale. Most lenders do not allow a short sale unless the payments are at least two months behind. The homeowner usually is required to write a letter of financial hardship to the lender. Some lenders have pre-formatted Financial Hardship Packages. Lenders usually prefer to work with REALTORS® in short sales to ensure proper marketing to sell the property and to prevent direct dealings with unlicensed investors or consumers.

Alternate spellings of Short Sale: short pay