In previous posts I have reviewed the Short Sale process from the Seller/Realtor's point of view. I have remained very active in representing Sellers in Short Sales (Currently I am involved with 7 Short Sales as the attorney for the Seller). On occasion I find myself representing the Buyer in a Short Sale. This can prove much more difficult because I am completely out of control of the Short Sale. Many times the Seller's attorney is not really involved with the process and it can be very frustrating.
When I have a Buyer I prepare th Buyer for the good possibility that the Short Sale will not be approved and the deal will fall through. To minimize the costs, in such an event I suggest that the Buyer pay only for inspections prior to short sale approval. All other costs should be paid only after approval is received. I assume that the property will appraise and that the title can be reviewed within a few days.
This seems to be a fair allocation of risk. Given that it takes a Herculean effort to get short sale approval, I do not feel that it is fair to then allow the Buyer to conduct inspections after receipt of the approval and possibly back out for little or no reason. At the same time the $200-$300 is well spent early in the process to see if a deal can be made and if there are repair issues, to include these issues in the Short Sale proposal, rather than to wait until the last minute. The costs of the appraisal and title examination are unnecessary if the short sale is not approved and these costs can add another $350 and $200 to the Buyer's costs respectively in my area. So, I would have to say that by spending the initial inspection money, the Buyer at least knows if the property will be worth the wait of the short sale approval, , ,
Please share your thoughts on this issue . . .
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