Oregon 30-Hour Real Estate Law Practice Test

Why are short sales typically pursued by sellers?

1. They want to upgrade their property

2. They are experiencing financial hardship

3. They wish to avoid property taxes

4. They are relocating for a job

The correct answer is: They are experiencing financial hardship

Sellers typically pursue short sales primarily because they are experiencing financial hardship. In a short sale, the lender agrees to accept less than the total amount owed on the mortgage due to the seller's inability to continue making payments, often because of financial struggles such as job loss, medical expenses, or other economic difficulties. This option allows sellers to avoid foreclosure, which can have a long-lasting negative impact on their credit score. While upgrading a property, avoiding property taxes, or relocating for a job can be valid motivations for selling a home, they do not specifically address the unique context of a short sale, which is inherently connected to the seller's financial distress. Short sales are a necessary option for those who are underwater on their mortgage and unable to meet their financial obligations, making the pursuit of this route an integral solution in times of financial crisis.