Normally when you sell your property, you the owner will realize all gains $, and also be responsible for any losses occurred if the property went down in value. A successful short sale allows homeowners who owe more money on their mortgage than their property is worth to sell their property at a loss without having to pay the difference or any fees ( realtor, repairs, escrow, title).
But why would a bank agree to this? When you prove to a lender that you have a financial hardship and are behind on your monthly payment, banks will look at it as a purely financial decision. They can avoid a costly foreclosure process, get a portion of their loan repaid and write off the losses. If the market is in a down turn, the sale could save them thousands of dollars down the line if they do not sell now.