When someone sells their home for less than the amount that is owed on it; we call this a short sale. The lien holder(s) agrees to release their lien on the property and accept whatever deficiency is left. A deficiency is the difference between the dollar amounts the property is sold for and the amount owed on it. If a house is worth $100,000 and short sells for $85,000 the $15,000 difference is the deficiency. Although an agreement can be made between all parties involved that the deficiency is written off and no one is liable for it once the property sells. The reason a lot of home owners use the short sale process instead of the foreclosure process is because it mitigates addition fees and costs to both the creditor and borrower. In the end both a foreclosure and a short sale is looked upon as negative on a credit report.