Short Sale Contingencies
Because of the market conditions, short sales have become commonplace in some parts of the country. And many buyers are interested in these properties because they perceive them to be potential “great deals.”
I’ve talked about that issue in the past, pointing out that this may not be true, since short sales attract lots of bidders, and the banks want their money so they generally will only approve an offer at market value.
But let’s assume you are going ahead with an offer on a SHORT SALE – so what are the short sale contingencies you want to include? You want to check with your agent on the specifics for your state.
First, you will want the financial contingency – unless you are a cash buyer, the offer should be contingent on your ability to obtain a loan.
Second, you will definitely want to have an inspection and your offer must be contingent on this. This is especially important for short sales, since it is likely the seller cannot do any repairs and the bank will require you to purchase the home AS IS.
Finally, you will want to make the offer contingent on the bank’s approval of the short sale AND request proof that the seller has provided the bank with the appropriate paperwork, application, and hardship letter that is required as part of the process. If that has not happened you will want written confirmation of when that is to occur.
Also, your agent should check with the listing agent to get a sense, if possible, of how long it might take for the bank to respond. Your offer can have an expiration date if you want, but it is likely that the time for the bank to respond will be rather lengthy and the offer might expire within that time. Know that if that happens you have the right to just walk away, or you may continue to wait. It’s your choice.