Buyer or Seller: Short Sales Involve Risk. It's a funny thing about short sales; people seem to treat them like a traditional purchase and sale transaction. But, the truth is that they only bear a small similarity to the traditional transactions of years gone by.
The greatest difference between the short sale and the traditional sale is that when a seller lists a home for short sale, the terms and the conditions of the sale are (for the most part) determined by the seller's lender(s). This means that even if the buyer and seller agree to the purchase price and other conditions of sale, ultimately the lender can override anything of the terms agreed upon between buyer and seller. For example, a buyer may want a seller to pay for termite work, but the bank may not want to pay for the termite work. Or, the buyer may want to pay 199k for the property and the seller may agree, but the bank may want 210k. As a result of this required third-party approval, buyers and sellers need to be aware that the deal is not "sealed" until the bank(s) issues its approval letter.
Now . . . about the famous approval letter. If you are a seller who has received an approval letter, read it carefully. Make sure that you understand all of the terms and conditions. Consult an attorney if you need to do so. If you are not happy with the terms and conditions, then contact the bank(s). And . . . if your concerns are not resolved, you do have options.
The California Association of Realtors has created a few wonderful documents that clarify certain components of the short sale. First off, we have a Short Sale Listing Addendum that is signed by the seller that advises the seller of the possible tax consequences and other issues that may come up within the short sale transaction. Also, buyers submit their offers with a Short Sale Addendum which reviews the role of the lien holder, when inspections will occur, how the deposit will be treated among other things.
Whether an agent represents a buyer or a seller, a good heart-to-heart is usually required that explains both the benefits and risks of the short sale. If you are a buyer or seller who has not had that conversation with your agent and have some questions about the risks of the short sale, feel free to contact me. My office has closed hundreds of short sale transactions, and we can share with you the benefits of our experience!
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Broadpoint Properties, Inc
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