In a short sale, which party must agree to incur a loss in order to move forward with the sale?

In a short sale, the lender must agree to incur a loss to facilitate the transaction. This process occurs when a homeowner is unable to repay their mortgage and seeks to sell the property for less than the outstanding mortgage balance. The lender must approve the sale under these conditions, as they are the party holding the mortgage and have to agree to accept less than what is owed. This typically involves the lender evaluating the homeowner's financial situation and determining that a short sale is preferable to foreclosure.

The buyer is not incurring a loss; they are purchasing the property at a reduced price. The seller is essentially trying to relieve themselves of a financial burden, and while they may not receive any proceeds from the sale, they are not the ones who are incurring the loss in the context of a short sale. The real estate agent's role is to facilitate the sale and assist both parties, but they do not bear the losses associated with the sale. Therefore, the lender is the key party that must agree to take a loss for the short sale to proceed.