Ace the Texas Real Estate State Exam 2026 – Unlock Your Realty Dreams!

A short sale in real estate is a transaction in which the property is sold for less than the outstanding mortgage balance, and this sale requires the approval of the lender. This situation typically arises when the homeowner is facing financial difficulties and cannot continue making mortgage payments. By agreeing to a short sale, the lender allows the property to sell for less than what is owed on the mortgage, providing a way for the homeowner to avoid foreclosure and for the lender to recoup some of their losses.

The process usually involves negotiations with the lender to accept the sale price as full satisfaction of the debt, which means the lender must review the financial situation to determine if they will grant approval for this arrangement. This is crucial, as the lender must agree to forgive the remaining balance after the short sale, averting the borrower from facing further financial liability.

In contrast, the other options discuss concepts that don't align with the specific definition of a short sale in real estate. For instance, a cash sale refers to the payment method and has no direct relation to mortgage balances or lender approvals, while a standard sale generally reflects a sale at market value without the complications of lender negotiations. Lastly, the notion of eliminating closing costs is a separate issue and does not pertain to the fundamental