Quick Short Sale Question

[Guy Johnson]

I am led to believe a short sale refers to when a bank is willing to take a lower amount than what is owed on the property. This is what I have always believed. However, I have been told it refers to when a property is going to the foreclosure auction only to be bought before that happens, essentially stopping short of the foreclosure process. I realize the bank may take less than what is owed before the auction, and that is where some people may get confused with the term. So is it refering to the lower price a lender takes, or is the the act of stopping the foreclosure short by purchasing the home before the auction, even if it sells for more than what is owed?