Multiple Offers On Short Sales - Pay Attention To The Short Sale Addendum In California
Agents who list and sell Short Sales in California need to understand the terms and provisions of the contracts, including addendums. The contract is a key indicator of a buyer’s intentions. There are many ways to measure buyers’ intentions to wait for short sale lender approval. My experience is that most agents listing short sales do not use a Purchase Addendum to tighten up the terms of the agreement. I weed out about 90% of the would-be offers by requiring my buyers to sign my Purchase Agreement Addendum. After all, my goal is to get an offer accepted with a buyer who is willing to wait at least 90 days for approval ... as that is a realistic period of time to expect to wait.
Jane Grant’s contractual point of view is spot on! She understands the contract and knows how to use it to her buyers’ advantage.
Buyer clients, many times want to submit several offers at a time on homes that are listed as short sales. If it's done properly then there is no reason not to.
In California, the default expiration for the purchase contract is the third day after the date that the contract is signed. If the seller, who is currently short selling their property does not respond with a counter offer and or sign the offer, then I write offers on homes for buyers who want to submit multiple offers. The current offer, is after all expired.
Of course, if the offer is signed by the seller, (current owner), and acknowledged by the buyer, then there is at least a contract in force that is, "subject to", lender approval. This is where buyer clients get really impatient because the long wait for the bank to "Approve", the short sale can really be difficult. I have successfully had buyer clients wait as long as nine months for short sale approval, by communicating with the buyer and the seller's agent to make sure ever attempt is being made to get a positive response from the bank.
Of course, there is no guarantee that lenders will approve the short sale at all and if they do they can counter the offer and ask for a higher price and or different terms.
In California, we use the Short Sale Addendum, which has a date in which the lender and or lenders are to respond to the short sale, and this applies only to an offer that actually gets signed by the seller, anyway.
If the buyer is under a signed contract and wants to make additional offers on homes then I make sure that the date we put on the short sale addendum is passed before proceeding.
My point of view is only from a contractual point of view. I realize that it causes a problem for "Short Sale Listing Agents", when a buyer walks before the bank approves the short sale. This is why in California, Short Sale listing agents must pay attention to the date on the Short Sale Addendum, and ask for a new one to be signed if it is ready to expire to keep the buyer bound to the contract.
I've never lost a deposit for my buyer this way and I've never had an issue with buyers being under contract with two homes.
I have had many seller's agents contact me way after the contract is expired wanting to resurrect the contract but by then my buyer has already closed escrow on another home!
Contract dates are the most important item that is most often ignored! What's your opinion on writing multiple offers on short sales?
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