What is a "short sale" in real estate?

A "short sale" in real estate refers to a situation where the lender agrees to accept a sale price that is less than the total amount owed on the mortgage. This typically occurs when the homeowner is facing financial difficulties and is unable to make their mortgage payments but wants to avoid foreclosure. In such cases, the homeowner works with their lender to sell the property for a price that is less than the outstanding mortgage balance. The lender's approval is necessary because they will incur a loss on the unpaid loan amount. This process can often benefit all parties involved: the homeowner avoids foreclosure, the lender minimizes their losses, and the buyer can potentially purchase a property at a reduced price.

The other options do not accurately describe a short sale. A sale that completes in less than 30 days is simply a quick transaction, not related to the financial condition of the property owner or the lender's acceptance of a reduced amount. A property sold at auction does not necessarily involve a short sale; auctions have their own set of processes and can also involve properties sold at full market value. Lastly, a transaction with no buyer financing does not speak to the essence of a short sale, which is primarily focused on the lender's acceptance of a loss on the mortgage during the sales process