Qualifications for a Short Sale
Before you eagerly climb aboard the short sale bandwagon, consider the following to determine whether you may qualify for a short sale. If you cannot answer yes to all three requirements, you may not qualify for a short sale.

The Home's Market Value Has Dropped: Hard comparable sales must substantiate that the home is worth less than the unpaid balance due the lender. This unpaid balance may include a prepayment penalty.

The Mortgage is in or Near Default Status: It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass.

You, The Seller Has Fallen on Hard Times: The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments.

Examples of hardship are:
1. Unemployment
2. Divorce
3. Medical Emergency / sudden illness
4. Bankruptcy
5. Death In The Family

A few examples that do NOT constitute a hardship are:
Bad purchase decisions. Spending all your paycheck on a brand new car.
Unhappy with the neighbors. Even if every home on your block has turned into pot growing houses, that will not qualify as a hardship.
Buying another home. The lender will not care if you have decided the home is no longer suitable for you or your family.
Pregnancy. Increasing the size of your family or starting a family is not considered a hardship.
Moving into an apartment. If you decide to move out of your home, that is a lifestyle decision and not a very good reason to abandon your home.