A short sale occurs when a property is sold for less than the amount owed on the mortgage. This usually happens when the home’s market value drops below the remaining loan balance, forcing the owner to sell at a lower price than the debt. For example, if a home has a $400,000 mortgage but is only worth $300,000, selling it at that price would be considered a short sale because it does not fully cover what is owed to the lender. WATCH VIDEO: ----------------------------------