Short Sales are sales made when the lender accepts less to pay off the mortgage than remains on the mortgage.  In this market where the home values have dropped an average of 30% in just one year, many people who own homes find they owe more on the mortgage than the home is currently worth.  This has created many issues for our local real estate community.  Short sales are usually not pre-approved by the lender, so when the buyer presents the offer, the offer has to go to the lender for approval, sometimes taking months to obtain.  In some cases lenders have approved, only to change their mind later or change the structure of the agreement at the 11th hour.  Some homes are listed in MLS as being "available", when in truth, the lender is sitting there with 3 or 4 offers deciding which one to accept, so the home really isn't available (the rules were changed to prevent this from occurring recently, so we will see).  The seller usually is behind on payments and does not have additional money to fix or sometimes maintain the property, so most are sold "as-is".   These sales can take up to six months to close, depending on which lender holds the sellers mortgage (or in some cases Mortgages).  From the sellers side, depending on a few factors that I will not go into today, the amount forgiven by the lender can be taxed by the IRS.   There have been some fantastic deals with short sales, but there also have been some horror stories from both buyers and sellers.  Do not expect a smooth transaction, and don't expect it to be quick, but it could be profitable for some buyers!