A short sale occurs when a home sale is negotiated with the owner at a price below the actual balance of the debt on the home.

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A short sale is a real estate transaction where the seller negotiates with the lender to accept a price below the outstanding balance of the mortgage loan. This is done to avoid foreclosure and allows the borrower to sell their home at a loss, which is typically less damaging to their credit score than a foreclosure.

A Short Sale Occurs When a Home Sale Is Negotiated