Washington State Real Estate Practice Exam

A short sale in real estate is characterized by a situation where the proceeds from the sale of the property are less than the outstanding amount owed on the mortgage. This occurs when a homeowner is unable to pay their mortgage debt and seeks to sell the property for less than the mortgage balance, usually to avoid foreclosure. The lender must agree to accept the lower amount as satisfaction of the debt, which makes this process distinct from traditional sales where the seller typically aims to repay the full mortgage amount with the sale proceeds.

In contrast, a sale described as occurring quickly does not necessarily indicate any financial distress or involvement of a lender's approval. A significantly discounted price may apply in various types of sales, not uniquely characterizing a short sale but often relating to market conditions or motivated sellers. Finally, a short sale typically involves a mortgage; therefore, a sale with no mortgage does not meet the criteria for a short sale situation.