What is a short sale?

A short sale is defined as the sale of a property for less than the outstanding balance owed on the mortgage, which typically necessitates approval from the lender. This situation arises when the homeowner is experiencing financial hardship and can no longer afford the mortgage payments, but instead of going through foreclosure, they seek a way to sell the property at a loss to the lender. The lender must approve the short sale because they are effectively agreeing to accept less than what is owed, and this process can help the homeowner avoid the negative consequences of foreclosure.

In contrast, the other options do not accurately define a short sale. A sale where the buyer pays cash upfront does not reflect the distressed financial situation usually present in short sales. A quick sale without inspections might imply a rushed process, but does not capture the essence of the mortgage situation inherent in short sales. Finally, a sale after foreclosure describes a post-foreclosure scenario that occurs after the lender has taken ownership of the property, which is entirely different from the pre-foreclosure context of a short sale.