What is defined as a "short sale" in real estate?

In real estate, a "short sale" specifically refers to a situation where the sale proceeds from the property are insufficient to cover the total amount owed on the mortgage. In this process, the lender agrees to accept a lesser amount than what is owed, allowing the property to be sold despite the outstanding debt. This often occurs when homeowners are facing financial difficulties and can no longer sustain their mortgage payments. By approving a short sale, lenders can avoid the more costly and time-consuming foreclosure process.

The other options do not accurately capture the essence of a short sale. The first option suggests that the seller receives the full amount owed on the mortgage, which contradicts the fundamental characteristic of a short sale. The third option implies a sale is executed quickly without inspections, which does not relate to the definition of a short sale. Lastly, the fourth option discusses a scenario where the buyer may assume the seller's payments, which again does not align with the conditions of a short sale transaction. Understanding the correct definition of a short sale is crucial for anyone involved in real estate transactions, particularly when navigating financial challenges.