What is a Short Sale?
A short sale is when a bank agrees to take less then what is owed for the sale of a property.
Wikipedia puts it like this:
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower.