There really are only a few qualifiers that place you in the Short Sale category. The most obvious would be that your home is worth less than you owe on the note.
The real question you want to ask yourself is: “Is there a reason we need to sell our house?”
Whether or not you qualify for a short sale involves simple reasoning. Whether or not your lender will approve the sale of your home for less than you owe is a different story, and only because of all of the red tape that you’ll run into through the process. That’s why you want an experienced agent on your side to help work through the red tape.
Your average bank employee is instructed to look at a myriad of documents in order to consider your short sale. Bank statements, paycheck stubs, tax returns, a hardship letter, etc., will be required before a negotiator is assigned to negotiate a fair market value for your home with the investor.
When it comes to the meat of the matter, the investor who owns the note on your house cares only about two factors:
- What is the market value of the home.
- How much is the offer?
There’s nothing else that matters to them. Oh sure, there are plenty of obstacles to overcome, but I’m thoroughly convinced that these obstacles are designed to filter the work-load that the bank is experiencing, and to drag out the process as long as possible to break everyone’s spirits. Miss that dotted “I” or that crossed “T” and the bank moves on to the next file.
The collection of information through that your payment servicer or lender puts you through is a process that they use to gather as much personal information about you as they possibly can. It’s not necessarily what they use to determine whether or not you qualify for a short sale. Remember, the investor only cares about two things. Your servicer cares about four billion things.
But Let’s Be Real About This
Back to the original qualifier: “Is there a legitimate reason we need to sell our house?”
If you are in a financial position, or a position in life in which your home is worth more than you owe and you will be needing to move at some point, due to whatever legitimate reason (death in family, deployment, loss of job or income, relocation, etc.) then you automatically qualify for a short sale, and you need to do everything within your power to find someone to help you prevent the possibility of foreclosure.
If your attitude is to “screw the bank” because “they screwed you” then I’d argue that you don’t have a legitimate reason to sell your home. You signed a note to pay the balance of your loan, but there’s nowhere on your note where it says, “only if my home has equity.”
If you’re going to walk away, you owe it not only to yourself to save your record from being tainted by foreclosure, but you owe it to your neighbors to try to prevent accelerated devaluation in your neighborhood. Every foreclosure affects the value of surrounding homes negatively.
Don’t walk away without a plan, and more importantly, don’t wait until it’s too late to take action. The BEST time to begin the short sale process is when you recognize that it’s a possibility.