In real estate, a short sale occurs when there is an outstanding debt which is greater than the value, or sale value. In other words, when there is a mortgage and no equity, a homeowner may need to sell the home at a discount, but cannot do so without shorting the balance of the mortgage debt.

Short sales have been an industry term for nearly 30 years. During the great recession, and the housing market crash, most people were aware of short selling to avoid foreclosure. However, one major component of a lienholder reducing the debt is that the borrower (seller) has an actual hardship. Some common hardships are death, death of a spouse or financial partner, job loss, job transfer, and quite often inherited properties become hardships.