What is a common characteristic of a short sale?

In a short sale, a common characteristic is that the lender must agree to accept less than the amount owed on the mortgage. This situation typically arises when the seller is unable to continue making mortgage payments and the home is worth less than the remaining amount on the mortgage. The seller seeks approval from the lender to sell the property for a price that is below the outstanding mortgage balance in order to avoid foreclosure.

This process requires the lender's cooperation because they have to take a financial loss. The lender evaluates the seller's financial situation and the property's market value before agreeing to the terms of the short sale. The agreement is imperative because without the lender's acceptance of the reduced sale price, the sale cannot proceed, and the seller would remain responsible for the full mortgage balance.

Other characteristics typically associated with short sales differ from this situation. For instance, a seller does not need to be current on mortgage payments to initiate a short sale, and the property is not always in foreclosure—many short sales are conducted to prevent foreclosure from occurring. Also, for a short sale, the market value must be less than the mortgage amount, not exceed it, which is the opposite of what is stated in the fourth choice.