What is a short sale?

A short sale is specifically defined as a real estate transaction in which the proceeds from the sale of a property are less than the total amount owed on the mortgage. This typically occurs when the homeowner is facing financial difficulties and is unable to continue making mortgage payments, leading to the property being sold for less than the outstanding mortgage balance.

In a short sale, the lender must approve the sale, as they are effectively agreeing to accept a loss on the loan, which is crucial for the homeowner to avoid foreclosure. The process allows the homeowner to relieve some of their financial burden while providing the lender with a way to recover some portion of the loan amount.

Choosing this option accurately captures the essence of what a short sale entails, focusing on the financial obligations of the seller and the lender's role in sanctioning the sale.