Define a "short sale" in real estate.

A "short sale" in real estate is specifically defined as a sale of a property in which the proceeds from the sale are less than the balance owed on the mortgage. This occurs when a homeowner is in financial distress and unable to keep up with their mortgage payments, leading them to sell the property for a price that will not cover the amount still owed to the lender.

In this situation, the lender must agree to accept less than the total owed on the mortgage, which can help the homeowner avoid foreclosure. The short sale process typically involves negotiating with the bank or financial institution holding the mortgage, as they need to authorize the sale and accept the reduced payoff amount.

Understanding this definition is crucial, as it highlights the financial difficulties faced by the homeowner and also sets the framework for the negotiations involved. It contrasts significantly with other scenarios, such as offers below market value or sales predicated on conditions of the property, which do not specifically relate to the debt on the mortgage.