What situation describes a short sale?

A short sale occurs when a property is sold for less than the amount owed on the mortgage. In this scenario, the seller's net proceeds from the sale do not cover the mortgage balance, which leads to a situation where the lender must agree to accept the lesser amount as full satisfaction of the debt. This often happens when the seller is facing financial hardship and is unable to make mortgage payments, making it necessary to sell the property quickly, often at a loss.

The other situations do not accurately represent a short sale. For instance, if the seller profits from selling above the balance, that would indicate a typical sale where the mortgage is fully paid off, not a short sale. Selling a home for cash without a mortgage also does not pertain to a short sale, as it implies that there are no outstanding debts associated with the property. Additionally, a buyer's offer being rejected for being too low does not involve the dynamics of a short sale, since it pertains to negotiations rather than the financial status of the seller concerning their mortgage. Thus, the correct answer reflects the core principle of a short sale: the seller's proceeds falling short of their mortgage obligation.