What characterizes a "short sale"?

A short sale is characterized by the sale of a property for less than the amount owed on the mortgage. In this scenario, the homeowner is typically in a financial distress situation where they cannot keep up with their mortgage payments and owe more on the property than it is currently worth. The lender must agree to this type of sale, and as a result, they often accept a reduced payoff to avoid the costs associated with foreclosure. This process offers the homeowner a way to avoid foreclosure, while the lender may recoup part of their investment.

In contrast, the other options do not fit the definition of a short sale. Selling a property for more than the asking price would indicate a competitive market scenario rather than a distressed sale. A sale that occurs within a week does not specifically relate to the amount owed on the mortgage and could potentially involve any type of transaction. Lastly, a sale requiring extensive repairs refers to the condition of the property and does not speak to the financial situation of the seller or the sale terms relative to the mortgage. Thus, the correct characterization of a short sale is specifically tied to the sale price being less than the mortgage owed, necessitating lender approval.