What is a short sale in real estate?

A short sale in real estate is when a property is sold for an amount that is less than the remaining balance owed on the mortgage. In this scenario, the lender agrees to accept less than what is owed to facilitate the sale, often to prevent foreclosure and to minimize their losses.

This process typically occurs when the homeowner is facing financial difficulties and cannot keep up with mortgage payments. The lender must approve the short sale, as they will need to agree to the reduced payoff amount. Thus, option C accurately describes the nature of a short sale.

The other options do not encapsulate the concept accurately. A sale that results in a profit suggests that the property is sold for more than what is owed, which is the opposite of a short sale. A sale approved by the court does not necessarily relate to the short sale context, as not all short sales require court approval; they are primarily negotiated transactions between the seller and the lender. Lastly, while a rapid sale may occur, it is not a defining characteristic of a short sale, as these sales can take time due to the approval process involved with the lender.