Short Sale - a sale of property where the value of the property is less than the value of the mortgage (or mortgages) against the property AND the seller is asking the bank to forgive the difference.

For example, if a home is valued at $170,000, the mortgage amount is $200,000 and the owner sells the property, the sale could be a short sale. If the seller is willing and/or able to write a check for the $30,000 difference to allow the transaction to close normally, this is not a short sale. If the seller is relying on the lender(s) writing off the $30,000 difference, then this would be a short sale.

Owners who sell via a short sale will receive a 1099 form for the amount of the difference between market value and sales price but this amount generally is not taxable as of 2007 (please check with an accountant to verify the tax implications for your particular circumstances.)

Short sales usually take four weeks or more while both buyer and seller wait to find out if the lender(s) has agreed to write off the loss on the loan(s).