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You should consult an attorney for advice regarding your individual situation.
Contacting an attorney does not create an attorney-client relationship. Do not send,
e-mail, or provide confidential information or information you do not wish to be
publicly disseminated until such time as an attorney-client relationship has been
established and requested to do so by an attorney.
Copyright 2009 Law Office of Craig W. Little, P.A. All rights reserved. You may
reproduce portions of this site or materials available at this site for personal and
non-commercial use. All copies of portions of this site or materials available at this
site must include this copyright statement.
Web Articles
Analysis of Short Sales of
Residential or Commercial Property
Buyer's Considerations
Other Terms of Offer to Purchase Property in a Short Sale
Once the price is set for the offer to purchase the property at a
short sale, the remaining terms of the offer must also be set.
Again, there are considerations for offers to purchase property
through a short sale that are not part of traditional real estate
transactions.
The offer to purchase the property in a short sale should
specifically state that it is conditioned on the lender accepting
the offer without revising or amending its terms. All time periods
within the offer, including those to secure financing, undertake
due diligence, and those for contingencies and performance
should begin when the lender has issued their written
acceptance of the offer.
Lenders who approve a short sale typically want or even
demand that the closing occur shortly after the offer has been
accepted. Therefore including a short timeframe within which
the buyer will close on the purchase is often attractive for
lenders and can allow one offer to be evaluated by the lender
more favorably than other offers. However, the buyer who is
submitting an offer to purchase property through a short sale
must be aware that lenders often will not agree to extensions to
close on short sales, therefore the proposed buyer must be
sure to include enough time for them to actually close on the
deal.
Lenders typically will pay for those closing costs that sellers
traditionally must pay in real estate transactions. But if the
buyer offers to pay for some of those costs, this will increase the
pay down on the loan the lender will receive which may help to
get the offer to purchase the property approved. Of course, the
buyer must include such factors in the proposed purchase price
when they are formulating their offer.
While lender review of offers to purchase property through a
short sale and the rendering of a decision can take time,
sometimes up to several months, placing short expiration dates
on the offer to purchase the property is counterproductive.
Sellers usually do not like such deadlines because the lender’s
review process is out of the seller’s control. And lenders do not
like such deadlines because they do not want to be limited in
their review. The buyer can place a deadline on their offer to
purchase the property, so that they are not held up indefinitely
waiting on the lender, but such expiration deadlines should allow
for several months for the lender to approve the offer, not
several days or even weeks.
An offer from a buyer to purchase the property in a short sale
will be more attractive to both the seller and the lender if they
believe the buyer will actually be able to close on the proposed
transaction. Therefore the buyer who secures financing before
submitting the offer and includes written evidence that they
have been pre-qualified or pre-approved for the necessary
financing will make the offer more attractive for both the seller
and the lender. Cash deals are, obviously, even more attractive
for the seller and lender therefore if the proposed transaction is
a cash deal then this should be clearly stated in the offer to
purchase the property.
The buyer who is submitting an offer must always bear in mind
that while the seller initially approves an offer, it is the lender
that ultimately controls the process and the transaction as a
whole. The criteria a lender utilizes when evaluating an offer for
a short sale is usually unknown. Lenders will generally not
disclose such details beforehand and they will only review a
short sale when a legitimate offer to purchase the property has
been submitted. When evaluating the offer, all lenders will look
at both the offer and the buyer, but some lenders place more
emphasis on the offer; therefore the highest offer price with the
fewest contingencies and shortest time to close would be the
most appealing to such a lender. Other lenders place a greater
emphasis on the proposed buyer and the likelihood that they will
close, so the lender can assure itself, as best it can, that the
buyer will close and the lender will not have to review additional
short sale offers. Therefore a large earnest money deposit and
solid pre-approval letter for the financing would be the most
appealing to this lender.
Return to Buyer's Short Sale Considerations
Residential or Commercial Property
Buyer's Considerations
Other Terms of Offer to Purchase Property in a Short Sale
Once the price is set for the offer to purchase the property at a
short sale, the remaining terms of the offer must also be set.
Again, there are considerations for offers to purchase property
through a short sale that are not part of traditional real estate
transactions.
The offer to purchase the property in a short sale should
specifically state that it is conditioned on the lender accepting
the offer without revising or amending its terms. All time periods
within the offer, including those to secure financing, undertake
due diligence, and those for contingencies and performance
should begin when the lender has issued their written
acceptance of the offer.
Lenders who approve a short sale typically want or even
demand that the closing occur shortly after the offer has been
accepted. Therefore including a short timeframe within which
the buyer will close on the purchase is often attractive for
lenders and can allow one offer to be evaluated by the lender
more favorably than other offers. However, the buyer who is
submitting an offer to purchase property through a short sale
must be aware that lenders often will not agree to extensions to
close on short sales, therefore the proposed buyer must be
sure to include enough time for them to actually close on the
deal.
Lenders typically will pay for those closing costs that sellers
traditionally must pay in real estate transactions. But if the
buyer offers to pay for some of those costs, this will increase the
pay down on the loan the lender will receive which may help to
get the offer to purchase the property approved. Of course, the
buyer must include such factors in the proposed purchase price
when they are formulating their offer.
While lender review of offers to purchase property through a
short sale and the rendering of a decision can take time,
sometimes up to several months, placing short expiration dates
on the offer to purchase the property is counterproductive.
Sellers usually do not like such deadlines because the lender’s
review process is out of the seller’s control. And lenders do not
like such deadlines because they do not want to be limited in
their review. The buyer can place a deadline on their offer to
purchase the property, so that they are not held up indefinitely
waiting on the lender, but such expiration deadlines should allow
for several months for the lender to approve the offer, not
several days or even weeks.
An offer from a buyer to purchase the property in a short sale
will be more attractive to both the seller and the lender if they
believe the buyer will actually be able to close on the proposed
transaction. Therefore the buyer who secures financing before
submitting the offer and includes written evidence that they
have been pre-qualified or pre-approved for the necessary
financing will make the offer more attractive for both the seller
and the lender. Cash deals are, obviously, even more attractive
for the seller and lender therefore if the proposed transaction is
a cash deal then this should be clearly stated in the offer to
purchase the property.
The buyer who is submitting an offer must always bear in mind
that while the seller initially approves an offer, it is the lender
that ultimately controls the process and the transaction as a
whole. The criteria a lender utilizes when evaluating an offer for
a short sale is usually unknown. Lenders will generally not
disclose such details beforehand and they will only review a
short sale when a legitimate offer to purchase the property has
been submitted. When evaluating the offer, all lenders will look
at both the offer and the buyer, but some lenders place more
emphasis on the offer; therefore the highest offer price with the
fewest contingencies and shortest time to close would be the
most appealing to such a lender. Other lenders place a greater
emphasis on the proposed buyer and the likelihood that they will
close, so the lender can assure itself, as best it can, that the
buyer will close and the lender will not have to review additional
short sale offers. Therefore a large earnest money deposit and
solid pre-approval letter for the financing would be the most
appealing to this lender.
Return to Buyer's Short Sale Considerations
Law Office of
Craig W. Little, P.A.