Buyer Tips for Purchasing a Short Sale

I took a class on Short Sales from Patrick Ritchie early last week and wrote about the seller aspects of a short sale. 

Since Arizona Association of REALTORS® does have a Short Sale Addendum that can be included writing a contract for a short sale, many of the points Patrick suggested are covered in the standard contract language.

Key points for a buyer’s agent and buyer of a short sale to include when writing a purchase contract:

• Seller to submit contract to lender within XX days of contract acceptance.
• Seller to immediately notify Buyer once lender has approved the sale.
• Contract acceptance (and inspection period) begins when the Buyer is notified of lender contract acceptance.
• Buyer will make earnest deposit upon receipt of contract acceptance from lender.
• Buyer can cancel the contract prior to lender acceptance.

However, be aware that banks are not involved in all short sales!

I’ve represented buyers twice this year in situations that where sellers had to bring funds to the closing table in order to sell their home, and in both cases it was in excess off $30,000.  In the one case, the seller shortage was declared prior to writing the purchase contract, but in the second, the situation didn’t come up until after the contract was accepted.  Both properties closed, but it was a worrisome situation for both buyers (and their agent). 

These are interesting times and buyers must be aware of some of the challenges of buying a home.   Finding a home is one thing.  Finalizing the purchase is another.