What is a Short Sale?    

When a home is listed and hopefully sold, for less than the seller owes on the mortgage.

This will require approval from the lender.

Who would do a short sale?

Sellers who can't make their mortgage payments, or some who can, but who want  'out from under' a mortgage that isn't helping them reach their financial goals.

Will this affect a seller and borrower's Credit Rating?

It might, but, the mark left on a borrower's credit is slightly less damaging than a traditional foreclosure, or, if the deal is done right, there will be no negative mark at all. The option to sell at a loss is becoming popular in this market, that most of the sales being finalized in Las Vegas right now are short sales, or 'bank owned' 'REO' or foreclosed homes.

Obviously, those of us who bought a home or refinanced a home in Las Vegas after  2002 find themselves owing more on our houses  than  the house will bring on the open market.