A short sale occurs when the value of a property is less than what is owed on the property and the lender accepts less than full payment to allow the sale. It benefits homeowners by reducing damage to their credit and avoiding foreclosure. To qualify, homeowners must show financial hardship and inability to maintain payments. The process requires documentation and can take up to 6 months. While it avoids foreclosure, homeowners do not receive any money from the sale and may owe taxes.