What Is a Short Sale?

A short sale is a last-resort option for homeowners who want to avoid foreclosure.

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Updated · 3 min read
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Written by Barbara Marquand
Senior Writer
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Edited by Beth Buczynski
Head of Content, New Markets

A short sale in real estate is the sale of a home at a lower price than what’s owed on the mortgage.

The transaction requires the lender's approval and is a last resort to avoid foreclosure when a homeowner can no longer afford to make mortgage payments.

Short sales, sometimes called pre-foreclosure or distressed sales, were common after the housing market collapsed in 2008 and left many homeowners underwater on their mortgages. Today, they comprise a much smaller share of total home sales.

A short sale isn't the only alternative to foreclosure. If you're a homeowner worried about your ability to pay the mortgage, explore mortgage relief programs before considering a short sale.

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