I recently completed and earned the Short Sales and Foreclosures Resource designation. I think the points concerning the home inspection are worth posting:
- As per contract. If the contract calls for the home inspection to be done in five business days after the contract has been executed, the five days would start from the time of signing by the buyer and seller not from the time of the lender approval.
- The buyer would not be able to negotiate any costs or repairs if the home inspection was completed after lender's approval. The lender's approval is based on a definite dollar amount to be realized at the closing and they do not allow for further negotiations.
- Most often, a short sale will be an as-is transaction, and the seller doesn't have the money to make the repairs nor will the lender make repairs. That said, the buyer still has the right to know what "as-is means and withdraw the offer or reduce the offer based on the home inspection.
- The listing agent needs to protect the seller. Allowing a buyer to wait until after the lender's approval to do the home inspection thereby giving the buyer the ability to walk away that late in the transaction may force the seller into a foreclosure sale because the seller would not have enough time to find another buyer.
- Although the approval process takes quite some time, typically lender's approval will provide only days, sometimes as few as five, for buyers to close, which does not give most buyers sufficient time to order a property inspection.
- Recommend that clients have appropriate property inspections performed. If buyers refuse, request that they acknowledge in writing that you recommended the inspection and they declined to do so. In addition, send an e-mail confirming the buyer's wishes regarding the inspection.
Please see additional article "Short Sale Myths And The Truth"