The Cleaner the Better
Monday, June 1st, 2009short sale contract page01
The Cleanest Short Sale Contract is Often the Best
by Bob Boog
When writing a short sale contract, try to make it as “clean” as possible. By clean, I mean that it should be typed and/or easy to read and as uncomplicated as possible.
Uncomplicated? No garbage fees. Naturally you will send a HUD-1 with the contract and most bank negotiators will line-item-veto costly inspections such as septic report, pest control inspection, home warranty and “clue” reports. These inspections are deemed unnecessary by a bank who prefer to sell property in “as-is” condition.
So why include them in the first place? Purchasers with “cleaner” offers will have a much better chance of gaining approval from the bank.
Listing agents should also include a Short Sale Addendum (SSA) that states certain time limits. For example, how long the buyer will wait to get lien holder approval, when the purchaser will perform their due-diligent inspections, what will happen to the initial deposit, etc. The Short Sale Addendum form helps untangle some of the uncertainties involved in a short sale transaction.
As a listing agent, I will often ask the selling agent if the purchaser is willing to wait three months to get an answer. Why? Because unfortunately, that’s how long it’s currently taking to get an answer back from the bank! Or I will ask the selling agent if his buyers are making offers on ten other properties hoping that he will get one. If so, then not to bother with submitting a bid on our property. There is nothing worse than wasting three months only to have a buyer walk out at the last minute!
If there are multiple offers on the property, the strongest offer is usually seen as the “cleanest” one–a buyer who, perhaps doesn’t have to give notice to a landlord, is willing to deposit money into escrow and is willing to be patient.
Short sales can become tricky transactions when it comes time to close. Purchasers may suddenly have to give notice. The seller’s tenants may fail to move out on time. And sellers may not have sufficient funds for required repairs.
Real estate agents have to be attentive to all of the terms and conditions of the real estate purchase contract–perhaps even more so now than ever before.
