North Dakota Real Estate Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

A short sale is characterized by a situation where the proceeds from the sale of the property are less than the total amount owed on the mortgage. This typically occurs when a homeowner is experiencing financial difficulties and is unable to continue making mortgage payments, leading them to negotiate with the lender to accept a lesser amount than what is owed in order to avoid foreclosure. In this context, the lender must agree to the short sale since they would be receiving less money than what is stipulated in the mortgage agreement.

In contrast, a rapid sale of property does not necessarily indicate a short sale, as properties can be sold quickly for various reasons without the financial distress that typically accompanies a short sale. A sale that requires an auction process is also not inherently a short sale, as auctions can apply to various types of sales that do not involve financial hardship. Lastly, the presence of multiple buyers competing for a property can lead to a higher sale price, which is not representative of a short sale situation where the seller is seeking to sell for less than the mortgage amount.