Jan 28, 2011

Tip 4-2011: Short Sales - Qualified Buyers?

We all know how to be sure a prospective buyer is a “Qualified Buyer.”  (cash to close, a high credit score, sufficient income, etc.)  Additionally, the house has to be “qualified” (satisfy any appraisal and inspection requirements.)
The “Qualified Buyer” for a short sale property needs two additional “qualifications.”  The first qualification is patience to allow sufficient time for the short sale lender to approve the short sale.  This “Qualified Buyer” can not plan to close within 60 days.  Although some short sale approvals now take less time, still the average approval is between three to five months.
The second qualification is less obvious.  The buyers of a short sale property should expect that they may be asked to contribute additional funds to obtain the approval.  Sometimes the investor, the second lender and/or the mortgage insurance company may ask for additional contributions in order to approve the short sale.  The Seller may not be able to come up with cash as they are in financial distress and raising the contract price may not be an option.
Thus, the “qualified” short sale buyer may need to assist in providing these additional contributions for approval of the short sale.  In other words, the short sale buyer should still have some “cash in the bank” in case the negotiations may need a little “extra” from someone to obtain the short sale approval.

Please contact us if you have questions or need legal advice.

Senior Partner
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia


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