Which of the following best defines a "short sale"?

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A "short sale" specifically refers to a real estate transaction in which a homeowner sells their property for less than what is owed on the mortgage. In this scenario, the homeowner is typically unable to continue making mortgage payments and seeks to avoid foreclosure. The lender must approve the sale since they will not receive the full amount of the loan from the proceeds of the sale. This process allows the borrower to manage their financial situation more effectively and can also be beneficial for the lender, as it may help them recoup more money than they would in a foreclosure situation.

The other options do not accurately define a short sale. A buyer's investment does not necessarily characterize a short sale; all real estate transactions involve some form of buyer investment. A quick price reduction might attract buyers, but it does not encapsulate the essence of a short sale. Additionally, a sale above market value contradicts the definition of a short sale, where the sale price is intentionally lower due to financial distress. Understanding these distinctions helps clarify the nature and context of short sales in real estate.

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