Short Sale Qualifications

You must prove the following to the lender:

The market value of the property is below the loan amount: Market value must be established by carefully and diligently marketing the property over a period of time. It is recommended that the initial offering price be established based on comparable properties in the market area. Under the FRT marketing plan price decreases occur only after a documented lack of interest and decreases are made in reasonable increments. Eventually the market price will be established when an offer on the property is received. Lenders want to see a slow, steady decrease in the list price that results in a contract; not a low initial offering that results in an immediate offer but leaves the lender wondering if they could get more.

The seller is facing a Financial hardship: Lenders will not approve a “short sale” because a buyer made a poor investment or because they are tired of dealing with their property. Lenders will only approve “short sale” transaction were the seller can prove some type of unexpected financial crisis that is forcing them to sell the property. Remember that at some point the homeowner proved to the lender that they could afford to pay the mortgage(s). Common hardships are increased mortgage payments because of adjustable rates, increased cost of taxes, insurance & association dues, loss of rental income, divorce, medical conditions and unemployment. In addition, the lender will require that the seller prove that they do not have the assets necessary to make up the difference between the sales proceeds and the outstanding mortgage amount(s).