Hi folks. I wrote this post almost a year ago but feel I need to bring it back to the top of the stack. Short Sales are another year older and it just seems like buyers and their agents would "get it" by now. You can't just walk away from the Short Sale Contract. If you do.....my Seller is entitled to your deposit money. A Short Sale contract is STILL a contract. Buyers that feel they can just walk are wrong.
Here is my opinion on why Buyers feel this way. They are misinformed.
A Short Sale contract is no different than a regular contract with the exception of the 3rd party approval contingency. This contingency is related to the Lender approving the “Short” NOT approving the contract. The lender has no authority to approve the contract since they are not a party to the contract.
They do however have the authority to approve or disapprove the Seller’s request for a “Short” payoff.
A contract is binding and legally enforceable when:
- It has a legal purpose
- The parties are legally competent
- The offer has been made and accepted
- There is consideration
- The parties have willingly consented to the terms
There may also be contingencies in the contract. Contingencies are: Conditions which must be met if a contract is to be performed.
Some contingencies may be to protect one of the parties:
- Survey
- Inspections
Some contingencies may need to be removed in order for the purchase to be completed:
- Title
- Short sale approval
- Financing
The Short Sale approval is just one more contingency in the purchase contract. And just like any other contingency it should have a time period to be removed.
If it can’t be removed in the time allowed then the parties can either extend the time period or cancel the contract and return the escrow deposit.
If it can’t be removed at all because the Short Sale was denied then the contract becomes “null and void”. The Seller is now unable to perform. This is no different than when the Buyer’s financing is denied. He too is now unable to perform.
Folks....this stuff is NOT complicated. It’s Real Estate 101. Stop trying to complicate matters by treating the Short Sale as anything other than what it is…..a contract contingency.
If your Short Sale listings are not closing. Get training. You’re doing something wrong.
If your Buyers are getting frustrated then you are not setting the right expectations.
These are my thoughts. What are yours?
***I am NOT an Attorney and this is not legal advice. I am however a Licensed Florida Real Estate Broker and this IS my opinion.
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
Want to find out more? www.CentralFloridaShortSales.com
***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.
Copyright © 2010 http://www.brokerbryant.com/ | All Rights Reserved
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
Want to find out more? www.CentralFloridaShortSales.com
***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.
Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales, Orlando Florida Short Sales, Celebration Florida Short Sales, Winderemere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.
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Hi Bryant,
Thanks for posting this. I just tried to go through one. What would you recommend if the counter offer's statement from the seller placing the short sale contingency on a contract had no expiry date?
all the best...
Hi BB - I think another factor is whether the Short Sale Addendum states that the lender's approval is a contingency. Language such as: "This contract is contingent upon the receipt of lender approval by (date)" could permit the buyer to walk without recourse if the deadline is not met.
BB - It is our job as professionals to explain and educate buyers and sellers about the short sale process. Unfortunately there are far to many REALTORS out there who don't.
Great post Bryant and mostly right on. Here in Florida, as you know, with the FAR/BAR As-Is contract, it is fairly easy to walk away from a short sale. Unless the listing agent puts some additional restrictions into the contract.
BB,
In my area, attorneys review the contract after it is signed. 99.9% of the time the result is an "escape clause" if there has been no response in a set time - often 60 days. The buyer can opt to hang in but isn't obligated. Clearly, a regional difference!
My thoughts are....that there are only 5 comments (now 6) because your logic is so sound that no one can argue with you :-) As always, direct and to the point. That's why I love your posts. Thanks BB
Shhhh...
I'm playing hide and seek with WidowMaker. Don't tell :)
TLW...ROAR!
Bill...
Just go on ahead and shoot that counteroffer. Turns what's left of it into a mail away :)
TLW...ROAR!
On the short sales I am involved with the risk remains with the buyer as well that if they walk they lose their funds. Simple as that!
Seems like the easy answer is the calendar - identify a approval by date and extend as necessary or walk.