A Short Sale is when a borrower owes an amount on her property, that when combined with closing costs and commission, is higher than the current market value. The Short Sale would occur when, through a negotiation between the homeowner and the homeowner's mortgage company(ies), the mortgage company(ies) accept less than what the homeowner owe's them on the loans, at closing. The property is sold "short" of what the homeowner owed on the property.
The other qualification, which the homeowner must have to be eligible for a Short Sale, is that there must be some type of financial hardship involved so that the homeowner has found it impossible or highly difficult to keep current on his mortgage payments.
I have received specialized training in being a Certified Distressed Property Expert (CDPE) and would like you to know that the Short Sale is a very good option to going through a Foreclosure. A Foreclosure should be your last option. A homeowner should always first contact their lender to see if some type of Loan Modification can be worked out.