What is a short sale?
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower/homeowner cannot pay the mortgage payment on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower.

Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and has a negative effect on the credit report  for the borrowers.

This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the defiency.

What’s the benefit of a short sale compared to walking away and allowing a foreclosure?
1)      You may be eligible for a relocation incentive to short sale your home. The reason your bank may do this is they know the longer you stay in the home during the short sale process the better condition your home will be in when it sells.
2)      Short sales on average sell for a higher dollar amount than a foreclosure. Your doing your part for the greater good in your area by perserving home values.
3)      Selling by short sale compared to foreclosing puts you in a position to own a home again within a few years in some cases. While a foreclosure may prevent you from owning again for 7 years from the Foreclosure date.
4)      Your credit score will not be hit nearly as hard. Your score could be as much as 200 points lower with a foreclosure in your credit history.