What is meant by a "short sale"?

A short sale refers to a situation where a property is sold for less than the amount owed on the mortgage. This typically occurs when the homeowner is facing financial difficulties and unable to continue making mortgage payments. In a short sale, the lender agrees to accept a reduced payoff amount, allowing the property to be sold even though the sale price is lower than the outstanding mortgage balance. This can help the borrower avoid foreclosure and the lender to recover at least some of their losses.

The other options describe scenarios that do not align with the definition of a short sale. Selling a property for more than the amount owed indicates a standard sale, while requiring a profit does not apply to the context of short sales, as they inherently involve selling at a loss. Additionally, the idea of proceeding without lender approval is not applicable, as lender involvement is crucial to approve the sale terms in a short sale situation.