Short Sale
Definition
The sale of real estate in which the proceeds from selling a property follows short of the balance of debts secured by liens against the property.
Explaination
The owner can’t repay the liens in full and the lien holder agrees to release their lien on the real estate and accept less than the amount owed on the debt.
Deficiency is the unpaid balance to creditors.
The creditor does not have to forfeit the deficiency and can obtain a deficiency judgment after the short sale.
This all has an adverse effect on the the credit score. A seller would prefer to be able to negotiate the removal of the deficiency prior to the closing