You’ll Need Lender Approval
A successful short sale means you've sold your property for less than its outstanding mortgage balance, and the lender has released its lien to allow the sale to go through. If your home's fair market value is $250,000 and you have a buyer willing to pay that amount, but your mortgage is $300,000, your lender might approve the sale regardless of the fact that the proceeds won't cover your whole loan. You must establish that some hardship exists to convince your lender that it would have to go to the time and expense of foreclosing otherwise. For the lender, a short sale is often the lesser of two evils.
Credit Scores and Deficiency Judgments
If this arrangement sounds too good to be true, it may be. Your credit score will still take a hit, although possibly not as severe as it would if your lender had foreclosed. Another question is what becomes of the unpaid mortgage balance. Have an attorney look over your short sale contract to make sure the lender is waiving its right to pursue you for the difference. Otherwise, you'll lose the property and could still owe a debt, possibly a significant one.