If a seller's property is supposed to be sold at a loss, what term describes this situation?

The term that describes a situation where a seller's property is sold at a loss is known as a short sale. In real estate, a short sale occurs when the proceeds from selling the property fall short of the balance owed on the property’s loan. In this case, the lender must agree to accept less than the mortgage amount due, which typically happens in situations where the seller is facing financial difficulties or market conditions that lead to a decrease in property value.

This term is particularly relevant in the context of distressed properties or when a homeowner is trying to avoid foreclosure. A short sale is seen as a quicker and less damaging option for the seller's credit than going through the foreclosure process. Understanding the terminology used in real estate transactions is crucial, especially for agents and buyers involved in scenarios where financial strains affect property values. This clarity helps in making informed decisions and in negotiating better terms for all parties involved.

While other terms like distress sale relate to urgent sales, they do not specifically address the financial nuances that characterize a short sale. A normal sale refers to transactions where the property is sold for a price that covers the seller's mortgage and associated costs without incurring a loss. Foreclosure refers to the legal process where a lender takes possession of the property after