A Short Sale is a transaction (sale) of a property where the proceeds (sale price) falls short of paying off the existing loan to the lender. A short sale may or may not fully satisfy the debt owed to the lender, the terms of which are considered/approved by the lender. Sometimes, the borrower is still on the hook to pay additional proceeds to the lender in the future. Short sales do negatively impact the borrower’s credit, but not as significantly as a foreclosure would have.