A short sale occurs when the proceeds from the sale of a house fall short of the remaining balance owed on the property’s loan. Usually, a seller is unable to pay the mortgage payment and has to sell the property in order to avoid foreclosure. The lender understands that selling the house at a moderate loss is better than pressing the borrower.
Since this allows them to avoid foreclosure, both parties agree to the short sale process. However, despite this agreement, the borrower is still obliged to pay off the remaining balance of the loan, which is known as the deficiency.
A short sale usually takes longer to close as compared to a regular sale. This will depend on how many banks or creditors will be approving the short sale. There could even be other liens on the property aside from the mortgage.