short sale

1. The sale of a security that must be borrowed to make delivery. Short sales usually, but not always, entail the sale of securities that are not owned by the seller, who anticipates profiting from a decline in the price of the securities. Also called selling short, short. See also ghost stock, short against the box, short cover.
2. The sale of real property when the outstanding mortgage exceeds proceeds from the sale. For example, a family buys a $250,000 home that is financed with a loan of equal amount (no money down). A year later the home is sold for $225,000 when the outstanding balance on the mortgage is $248,000. See also debt-discharge income.