A short sale is when a lender allows you to sell your property for less than what is actually owed on your mortgage.
Example. Say you owe $120,000 on your home. You call the bank and ask them for help and ask them if you can sell your home for less that what you owe on your home. A buyer offers you $100,000 for your home, the bank accepts the offer and you sell your home for $100,000. The bank may forgive the $20,000 that you owe them or may come after you for the remaining $20,000.