SORRY ABOUT THE PIC, I JUST LOVE THE BASKETBALL HALL OF FAME!!!!

Short sales remain a slick shifting maze. The market has been changing, rates are climbing, and the number short sale transactions that are being processed by lenders is also increasing. These factors are creating more stress on an already stressful process. Below are a list of changes to the offer and purchase and sale agreement that balances the equities between buyers and sellers in these transactions and a brief explanation of the reasoning for each. This first article will focus on timeline changes and the second post will focus on inspections and addendum issues:

NOTE the paragraph numbera re not as important as the subheading, so if the MA contract you are using has different numbers, make chages according to the heading:

Changes to the Contract Paragraphs 4 and 7 Closing/Performance Dates Change date to 21 days from date of short sale approval* Paragraph 13 Mortgage Contingency Date: Change date to 14 days from date of short sale approval, Paragraph 20 inspection dates should occur within the normal 10 day period!*

Date changes*

Because the time frame for short sale approval can vary widely from 21 days to 120 days, many attorneys and Realtors are changing the dates that we normally see in the offer and purchase and sale agreement. Without these changes a Buyer will need to pay for inspections, an appraisal, title and other attorney fees prior to short sale approval if the standard periods of time are used in the Realtor contract and the short sale approval is delayed. To balance these expenses we encourage buyers to conduct their inspections prior to short sale approval, but wait until after short sale approval to pay any additional charges.

The rationale for the above compromise in the normal timeliness is three-fold:

1. We do not want the Buyer to pay for an appraisal and title work if the short sale is not approved in a timely manner or if it is denied - (sometimes we never hear and the property is eventually auctioned)

2. We do not want to find out at the end of a long short sale approval process that the Buyer is not interested in purchasing the property because of a repair issue which depending on its nature may be: a) non-negotiable (Buyer simply refuses to Buy a home with water issues) or b) now impossible to negotiate with the lender that has given their approval based upon the property being sold “as is”. If the repair issue is discovered early in the process, it can be negotiated in the sale price before the contract is submitted to the lender and short sale approval is obtained.

3. We do not want our Buyers wasting valuable house hunting time in the event that there are inspection issue.  Rates are climbing and there are a lot of great deals out there.  If the house does not inspect, let's get these Buyers to move on and Buye their home in this Buyer's Market!

Next post concerns inspection and an updated addendum!