Do I Qualify for a Short Sale?

While there are certainly benefits and advantages of a short sale, not everyone qualifies for one.  To determine how you qualify for a short sale, let’s first review what a short sale is.

In simple terms, a short sale is when a mortgage lender agrees to accept less money for a house than the original price for which it was sold.  For example, if you bought your home for $200,000, but it’s only worth $175,000 now, you are short $25,000.  A lender might agree to a short sale in order to avoid a foreclosure.  There is more to it than that, but let’s move on to the main question: How do you quality for a short sale?

There are three criteria a lender will look at to determine whether a person qualifies for a short sale.  Specifically, a mortgage lender will need to know if you have fallen on hard times, what assets you have and whether your home’s value has truly taken a dive.

Financial Hardship

A mortgage lender won’t let just anybody sell their home for less than they’re owed.  A person qualifying for a short sale must be able to prove they have fallen on hard times.  It may be that you’ve lost your job or have become divorced, or maybe you or the loan’s co-borrower have developed a serious and costly illness, or the co-borrower has died, hurting your ability to pay the loan.

No Assets

Some people think a lender won’t approve a short sale unless you’re broke.  This isn’t the case at all.  The mortgage lender just wants to see that you don’t have enough cash to go ahead and pay off the loan, and they want to determine whether you’re going to have a hard time meeting the loan’s obligations.

Fallen Home Value

Lastly, the mortgage lender needs to make sure the value of your home has actually fallen.  That’s kind of the point of a short sale.  If your home isn’t worth less than it was when you bought it, you can’t qualify for a short sale just  by the mere definition of the term.

If you’re considering a short sale, ask yourself these three questions:  Has my financial situation changed?  Am I unable to pay off the loan or keep making payments?  Is the value of my home less than the loan I took out on it?  If the answer to all three of those is “yes” then you may qualify for a short sale.

If you do qualify for a short sale, the mortgage lender is going to want a lot of detailed financial information.  The process for applying for a short sale can be a difficult one, so make sure you contact a qualified short sale expert in your area for help.  If you’re in the Wilmington, NC area, give me a call at 910-622-0319 or email me at  If you’re not in the southeastern North Carolina region, give me a call anyway.  I can confidently refer you to other short sale experts.

Buying a Short Sale In Wilmington and Leland NC

How to Buy a “Short Sale” Home In Wilmington and Leland NC

What you need to know before buying a short sale home

While most first time home buyers dream about getting a great deal on their first home by buying a foreclosed property at auction, short sales can be a much easier way to get that great deal.

A short sale is defined as a transaction where a lender permits a home owner to sell their home for less than the amount of their mortgage. In most cases, the mortgage lender will not require the seller to pay any shortfall or deficiency. In addition, the mortgage lender will usually allow the expenses of the seller such as real estate commissions and conveyance taxes to be paid as part of the transaction so the seller does not have to pay them.

Short sales are listed with Realtors on the Multiple Listing Service just like regular home sale transactions. The only difference is that the listing must include the phrase “subject to lender approval.” That key phrase indicates that the transaction will be a short sale. The primary difference between a regular transaction and a short sale is the short sale must be approved by the lender as well as the sellers.

Why would a mortgage lender permit a short sale and take a loss?

With the recent drop in home values, millions of home owners have homes worth much less than the amount of their mortgage loans. For the home owners who have to sell their home due to hardship such as job loss, they are unable to sell their home without a short sale transaction. Mortgage lenders do not want the expense and liability of foreclosing, so they offer to let sellers sell and take a small loss now rather than foreclose and take a larger loss later.

What is benefit for home owner?

The main benefit to the home owner is that they can sell their home and get on with their life without being saddled with the amount of their mortgage that exceeds their home value.

Why is it great for you the buyer?

The simple answer is that you will be able to buy a home at a lower price in better condition than if you purchased a foreclosure. Sellers are getting out of their situation thanks to the lender, so they have an incentive to keep the property in good condition so you will buy it. Just as important, sellers are not getting anything out of the transaction so they do not care what the selling price is as long as the bank lets them out of their debt.

How do you Buy a Short Sale?

  1. Contact an expericed short sale agent
  2. Find the home you want that is a short sale.
  3. Make your offer but include comparable sales to justify your offer
  4. Follow up with the seller to make sure they submit their request to their lender.
  5. Be ready to close quickly (once lenders approve a transaction, they want to close fast)

By working closely with your Realtor and the seller, you can buy a home for below today’s low market values in better shape than any foreclosure you will find.


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