The Short Sale Addendum
Even as Birmingham, Alabama short sales continue to be a significant part of the real estate landscape, they are still a mystery to the vast majority of buyers as well as some real estate agents.
Off the top, both short sale buyers and short sale sellers should know that there are certain requirements that must be met by the seller’s bank.
The seller’s mortgage company (bank) has their own short sale addendum that all parties (buyer, seller, listing agent and selling agent) will need to sign. But in addition to the bank’s addendum, I always have buyers sign a short sale addendum upfront. It doesn’t matter whether I am the listing agent or the buyer’s agent, all buyers and their agents must sign this addendum. This addendum will include, but not be limited to the following:
- Offer will not be submitted to seller or seller’s mortgage company without a pre-approval letter or proof of funds
- Purchaser, seller and agents acknowledge that the short sale closing date (requested on offer to purchase) of ______________ cannot be guaranteed due to the nature of the short sale processes.
Please note that: The short sale process is complex and involves many different parties who must all agree to take a loss on an outstanding debt (i.e., investors, additional lienholders, and mortgage insurance). This leads to a longer timeline than a traditional home sale and can take months to complete if approved by the bank.
- All parties understand that the listing price of $_____ has (__) has not (___) been pre-approved by the seller’s mortgage company.
- Purchaser understands that seller has the right to reject any lender approval that does not guarantee that the seller will be relieved of future undue financial hardship including but not limited to the request for cash contribution at closing and/or deficiency judgment or promissory note.
- Purchaser understands that although seller may accept offer, the seller’s mortgage company must must also be on board with the terms negotiated by the seller and buyer.
- This is an AS-IS purchase. Seller will not make repairs.
- All parties understand that the mortgage company may order a BPO or appraisal and will not guarantee a turnaround time.
- Additional addenda may be required by lender.
Why the Addendum?
You may be wondering why I employ such an addendum. Well the reason is very simple, I think every buyer should understand these basic precepts of the short sale process. If I am the listing agent, I want to make sure that the short sale buyer is aware of these contingencies just in case they are working with an agent that may not be knowledgeable about short sales or an agent that doesn’t want to “frighten” a potential buyer aware.
The short sale process is complex enough without everyone being on the same page from the beginning.
My motto is simple: Put All Your Cards on the Table When it Comes to Real Estate Transactions.
Whether you’re looking to buy real estate your sell your existing property, call or send me and email today, so we can discuss how I can best serve your Birmingham-Hoover Metro area real estate needs!
Exceptional Service Because You Deserve It!
Charita H. Cadenhead
Birmingham Alabama Realtor®
(205) 527-1112 – Direct
(800) 496-7431 – Fax
Comments or questions are welcome.
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