What Is a Short Sale? A Simple Guide for Homeowners
By Kris Lindahl Real Estate. Updated 2026-11-10.
The short answer
A short sale is when you sell your home for less than the amount you owe on your mortgage. Your lender has to agree to take the smaller amount. If the lender says yes, the home sells, the lender is paid from the sale, and you can move on.
The word "short" means the sale money falls short of what you owe.
Who needs one
A short sale is for homeowners who owe more than the home is worth and cannot keep up with the payments. Maybe a job changed. Maybe bills went up. Maybe you bought near the top of the market and prices slipped.
It is not for everyone. If you have plenty of equity, a normal sale is usually the better path.
What happens step by step
First, you list the home at a fair price. Second, you get an offer from a buyer. Third, you send the offer and your hardship paperwork to the lender. Fourth, the lender reviews it and says yes, no, or counter. Fifth, if approved, you close.
Lenders can be slow. A good agent keeps pushing the file and keeps you updated.
Does a short sale hurt my credit?
It can lower your score, but for many people it is easier on credit than a foreclosure, and you may be able to buy again sooner. Rules depend on the loan type, so ask your lender and a tax or legal pro about your own case.