If your dream home is a short sale, there are a few important items that should be specified within the California Residential Purchase Agreement and the Short Sale Addendum to protect yourself as a buyer. The truth is that all items are important on those documents but they aren't always completed in their entirety.
Short Sales take longer than normal sales due to the time required for lender review and approval (and it is important to remember that lender approval is not guaranteed).
Protect Yourself Item #1:
Specify the maximum interest rate for your comfort-level house payment on page 1 of the Residential Purchase Agreement under Finance Terms. During the short-sale approval process, mortgage interest rates could change - and not necessarily in your favor. If you don't specify your comfort-level interest rate, you are contractually obligated to proceed at the highest interest rate for which you qualify and that may result in a house payment that you are not expecting.
Protect Yourself Item #2:
Put an expiration date on the Short Sale Addendum. The short-sale addendum states "This Agreement is contingent upon Seller's receipt of written consent from all existing secured lenders and lienholders ("Short Sale Lenders") no later than 5:00 P.M. on ____________________(date)". If that date arrives without lender approval and you are still prepared to wait, you can extend to a new date. However, if an equally favorable home comes on the market that isn't a short-sale, the expiration date on the contract is your escape clause to write an offer on the new home.
Wendy Cutrufelli
Broker Associate
925.917.1135
The positions on this site are my own and don't necessarily represent Alain Pinel Realtors' positions, strategies or opinions.
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Wendy, Great Advise!
It is always wise to educate our buyers. Thanks for sharing.
Thanks for reading Mark!
Good points, Wendy, thank you!
Hi Kari, I completely agree. Educated buyers rarely have remorse.