Short Sale (Real Estate)

See: Sheriff's Sale.

If this is happening to you, something went vastly wrong upstream.

You wanted the home. You put $80,000 down. You borrowed $300,000, which you promised to pay back. But then the market blew up. That $380,000 home is worth $240,000 today. And you lost your job. And your dog got cancer. And rather than shoot her in the head, you decided to operate. And chemo her. And other stuff. Then she died. And you needed therapy. Which wasn't covered by your insurance. Because you had COBRA. And to save money, well...you get the idea.

So you were now short on your loan. Even if the home sold for its $240,000 current price, net of $10,000-ish in commission and $5,000 in closing costs, the bank won't get back even its full amount of the loan. So you're selling the home (or rather, they are) short of the total loan you owe. Say goodbye to your credit for 7 long years (3 years if you're an FHA person).

Bottom line: pay back what you promise. And next time, shoot her in the head. (The dog.) It was a miserable last 5 months for all.