Sep 10, 2010

Tip 31-2010: Short Sales & Contract Contingencies

The current VAR Short Sale Addendum allows the Purchaser to start the home inspection and apply for the loan either once there is a ratified contract or after short sale lender approval.  The Seller should prefer that all contingency dates start with contract ratification so that the home inspection (usually for informational purposes only) and the loan commitment are resolved prior to the short sale negotiations.  The Purchaser, however, will not want to incur any expenses (home inspection, appraisal or title search) until the short sale lender has approved the short sale.
Obviously, the Seller and the Purchaser have conflicting interests as to these issues.  Nevertheless, the best approach for a potential short sale approval is to complete the inspection, order a title search and obtain the loan commitment as early as possible.  In negotiating with the short sale lender it is always preferable to be able to tell the negotiator that you can close as soon as you receive the short sale approval.  If you have to wait for the inspection results or to obtain loan commitment, the short sale negotiator may not be as “quick” to negotiate and accept the short sale.
PS:  ”Quick” is not a normal word with short sales, maybe it would be better to say the short sale negotiator may not be “as slow” if the Purchaser’s contingencies have been satisfied.
Please contact me (Charlottesville Attorney) if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia 434-973-7474

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