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What is short sale? A short sale is when you owe more on your house than it is worth and you sell it for less than you owe. For example, in 2008 you bought a property for $650,000. Now, in 2011, it is worth $300,000. To sell your house in this situation you would either have to pay the difference between how much it is worth and how much is owed or you could do a short sale.