If you'd asked me, "What's a short sale?" three years ago, I would have looked at you funny or quipped something whitty like, "10 days". Not because I didn't know, but because you most likely didn't need to.

There was almost no such thing in a market where the qualifications for loans and refi's was warm breath - where banks were willing to work with financially distressed customers or you could just cash out of your home in a matter of weeks with a willing buyer for a price over market value.

Today, the question is on a lot of minds. And it's no joke. There's fear on the faces of the people who ask this question. Their voices quake when they ask. They are asking because there is a real possibility that it could happen to them. When people ask that question these days, they are facing a potential late loan payment. They have already cut back their spending as much as possible. They are in financial distress and are facing the reality that their home might be worth the same as it was in 2001 - three years BEFORE they purchased it. There's a lot of bad news behind that question.

The good news is, short sales need not be a mystery. Here's the short answer to the question:, "What's a short sale?":

A short sale is a sale of a home where the sell price will be less than the loan payoff amount.

If your loan payoff is $300,000 and your home's market value is $250,000, you are probably in a short sale situation - unless a buyer just woke up from a three year nap and is somehow willing to pay significantly over market value for your home.

It's also likely, if you're asking the 'short sale' question; you're not just thinking of selling your home because you are tired of mowing so much grass and want to move to someplace with less lawn maintenance. People don't sell short because they want to. They sell short because they HAVE to.

People sell short because selling a home for a loss is the best option. Being ont he hook for the $50,000 short is, after all, better than being on the hook for the entire $300,000 loan and the additional fees associated with foreclosure, which the bank WILL try to collect.

People sell short because it's a better option for credit scores in the long term than foreclosure. They sell short to get the home out of the financial picture and to be better equipped to deal with the rest of their financial issues without that largest debt looming.

The mystery of the short sale is not the what, but the how. 

How do you get through a short sale with as much as possible, including your dignity? How do you advertise a short sale? How do you negotiate a short sale with the bank? With the buyers? How do you deal with the credit rating implications? How do you work through the process while still dealing with the emotional issues surrounding the financial crisis in your life that has led to this situation?

Over the next week, we'll look at how to decode the short sale mystery, answering questions like:

What are your options?

What is the short sale process?

What is the credit score impact of a short sale?

And more...