A short sale is a real estate transaction in which a homeowner sells their property for less than the amount owed on the mortgage. This typically occurs when the market value of the property has dropped below the outstanding mortgage balance and the homeowner is unable to cover the difference. The lender must agree to the short sale as it involves accepting a lower payoff than what is owed.
Short sales are often pursued as a way to avoid foreclosure, as they can be less damaging to the homeowner’s credit and financial situation. However, the process can be complex and time-consuming, requiring approval from the lender and negotiations with potential buyers.