Short Sale
Direct definition
A sale in which the lender agrees to accept less than the full mortgage payoff to avoid foreclosure.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Short sales require lender approval, take longer than normal sales, and can affect the seller's credit less severely than foreclosure.
Why it matters
It's a workout option for underwater homeowners who need to sell.
Where you may see it
- Purchase agreement
- Lender approval letter
- Title commitment
A real-world example
Owing $320,000 on a home worth $290,000, the seller negotiates a short sale for $285,000 with lender approval.
Educational and illustrative only
A common misunderstanding
A short sale isn't the same as a foreclosure — the homeowner still owns and sells the property, but with the lender's agreement to accept less than the full payoff.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026