short sale is when the owner owes more than what the home is worth so when he puts the prpoerty up for sale he has to list the prpoerty so it sales which is lower than what he owes. Once the owner gets an Offer he accepts the Offer subject to the lender agreeing to forgive the balance. for example: The owner owes $550,000 on his home and he is starting to have trouble making the payments, maybe the loan has adjusted or went from “interest only” to “full principle”, now he must sell or lose the prpoerty in foreclosure. so he looks at what homes are selling for and he sees that the home next door is the same size, style and has the same upgrades sold for 420,000. so the Owner puts his house up for sale at $420,000. there is a potential lost of $130,000. so when the owner gets an offer at $420,000 he needs to try and negotiate with the bank to accept the loss “short pay” “short sell”,References : Was this answer helpful?