Here in Washington State, there is a 3-part test to qualify for a Short Sale.
1) The property needs to be worth less than is owed.
2) There must be a hardship - death, disability, divorce, unemployment, etc.
3) Generally they must be in default (exception with VA and sometimes FHA)
Seems pretty straight forward to me.
There are numerous other points to consider after the 3-part test as to the level of difficulty and reasons to say NO to a listing that is doomed to failure. Things like mortgage insurance issues, and of course deficiency expectations, etc., but the important take home for SHORT SALES is that it is OK and appropriate to say NO - it is highly recommend a homeowner considering this option speak to a reputable real estate attorney. I think then everyone has a better chance of resolving the problem issues at hand.
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