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Jen, Home Buyer in Massachusetts

We recently placed an offer on a short sale property, the bank counter offered and we accepted.

Asked by Jen, Massachusetts Tue May 27, 2008

Our realtor advised us to get the title 5 inspection (we agreed to do) and home inspection underway so everything is set up and ready to go....my concern is that our realtor has not sent over the official purchase and sales agreement as of today...is it risky to go through with these inspections with just a verbal ok?? there has been many people trumping around checking out the property..we dont want to pay for all of this and lose the home??

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Hi Jen,
With regards to the inspection and proceeding forward - I think you really need to wait until you have a signed agreement by the Bank, whether it's an initialed original changed Offer form or an official Purchase and Sales Agreement. As one of the other agents has said, your 7-10 days timeframe to do all of your inspections should start when the contract is officially signed by BOTH parties. No reason to spend money now until you are fully sure the Bank has signed the offer put forth on the table. Once you get the signed Purchase and Sales Agreement, then you can go ahead with the inspections. If they go alright and you decide to proceed, a signed copy of the Purchase and Sales Agreement should be given to your bank or mortgage company and in turn, they send out an appraiser to the property to make sure it's worth what you are paying for it. Then once all is good with the appraisal, your next step is the mortgage commitment letter (this could take anywhere from 2-4 weeks to get depending on the lender). Once that is gotten and the attorney does the title work on the property and it is clear, you should be good to go to closing. Sometimes when you get an offer accepted by the bank, they want to close within 30 days, so make sure you have an attorney on your end to review your contracts and make sure there is language covering your timeframes for everything. Hope this helps and good luck with the deal!
0 votes Thank Flag Link Fri May 30, 2008
It really depends upon what you agreed to. Many times a short sale offer the home inspection and PS are triggered by the short sale approval. I would ask for the short sale approval or approvals.

Go back to your original contract to purchase and see what you agreed to.
0 votes Thank Flag Link Sat May 18, 2013
Wait until you have a complete set of signed papers. It isn't wise to pay for a home inspection and then they may sell to another person.
0 votes Thank Flag Link Sun Dec 12, 2010
Hi Jen,

I can understand your concerns, however from the agent's perspective I also see her point of view. I was the listing agent for a short sale that we had in escrow. It took the lender two months to approve the buyer's offer. In the mean time, the home was taken off the market and placed under a pending status. The buyer performed the inspection only after the lender approved the short sale, then cancelled right after due to electrical issues. We lost two months under contract, only to have the buyer walk. We had no buyer and the lender was pressuring us to close under 30 days. In the end, the seller lost her home to foreclosure and the origanal buyer wasted two months under contract. If the buyer had performed the inspection during the offer stage, she would have discovered the items in need of repair and could have cancelled then. This would have given the seller time to make repairs and more time to market the home. So you are in a catch 22. Good Luck.
0 votes Thank Flag Link Sun Dec 12, 2010
Hi Jen
Go with your gut! It is extremely important to have all documents inhand and in writing especially when it comes to spending monies associated with a short sale. Once you have an accepted short sale, the listing agent usually receives a document stating that this is the plan going forward...although it may not be an offered signed as they (the banks) usually like to work from a purchase and sales agreement. (Please keep in mind that many states do it differently than Massachusetts and go directly to a purchase and sales agreement, I believe we are one of the few in certain areas where we may go to an OFFER TO PURCHASE and then onto the second step of a mutually agreed to PURCHASE AND SALES AGREEMENT and we are dealing with a number of lenders who are located outside our geographic area_).You can be firm to not proceed with inspections, appraisals and etc which are dollars you are putting out at risk regarding this short sale until you have received confirmation from the lender that they are intending on going forth with the sale of the property with you.
Short sales are always a risky endeavor, thus the risk vs reward. Frequently you may get a considerable discount on the cost of the home with a short sale purchase but that is because there is risk. Time spent in being committed to this transaction which may not go forth and then at the last moment in time the seller may claim bankruptcy and put a stop to all action on the table. Are you prepared for this? Please do not hesitate to call on me if I may be of assistance to you or your realtor.
0 votes Thank Flag Link Sat Dec 11, 2010
the counter offer is signed and in...we cannot get our financing for this property without these inspections we have a sched closing date, is this still risky for us to go ahead...once they counter offer and we accept sign and return they are not "under contract with us" so to speak?????????/
0 votes Thank Flag Link Wed May 28, 2008
Jen, No do not spend any monies on any inspections. I have sold a few short sales and although they gave you a verbal acceptance. This means nothing. Until you the final executed contract with both your's and the lenders signatures, do not move forward. I once had 14 offers on a short sale, where the lenders loss would have been a toal of $20,000. Although they gave me a verbal acceptance, in the end they proceeded with the foreclosure. So wait it out.
0 votes Thank Flag Link Wed May 28, 2008
Jen,
I would be very cautious to spend money for inspections until I receive the contract signed by the Bank; besides, the time frames for inspection period should begin at the time the Bank accepted and signed. This is a very uncertain time for not only buyers, sellers but also realtors trying to best deal with the transaction; as well, all Banks and their representatives are not all on a level playing field!
0 votes Thank Flag Link Tue May 27, 2008
We have initialed the purchase and sale with the counter offer changes our realtor just hasnt sent the offer back to the bank approving the short sale as of yet......
0 votes Thank Flag Link Tue May 27, 2008
Hi Jen,

Even though most banks selling their inventory want the buyers to accept the property "as is" , you still have a right to your home inpsections. This should have been written into your offer to purchase, allowing you 10 days or so to complete your inspections - including the Title V inspection. Should the Title V fail, then your lender isn't likely to approve your loan anyway, unless the Owner replaces or repairs the septic system. You would have the protection of your financing contingency to back out of the purchase if your financing falls through for any reason. Your inspections are your best protection in these situations because the Owner - the "bank" never lived on the property - so they can't disclose to you anything about it or its condition or history. Your Realtor is correct - - you should get the inspections done! It is short money in the grand scheme of things, not to mention the stress of ending up in a lemon of a house if you don't know ahead of time just what you are getting yourselves into! If the inspections fail, it IS possible to attempt to renegotiate these items with the lender, so long as the offer had included ample inspection times, and those dates will still allow for you to complete your "due process". This information, should have moved over and been incorporated into the body of the language for the P & S, however often times the banks don't want changes to "their" contract. Did you have an attorney review your contracts? How much down payment and deposit monies have you put down to bind these contracts? Do you stand to lose a lot? or a little? If you risk losing a couple of thousand at best, on most likely the biggest investment to date in your life - - far better to have gained piece of mind with a short loss,,,,, then years of anquish and frustration being locked in to a 30 year mortgage on a "money pit".

http://www.VanessaR.net
0 votes Thank Flag Link Tue May 27, 2008
Does the agent have the signed counter and you don't have it? If this is the case I don't think I would worry about it.
Web Reference: http://getprequalified.com
0 votes Thank Flag Link Tue May 27, 2008
Good evening Jen:

You are correct to be cautious. I would not move forward without something in writing from the bank. You could spend monies and more time and someone else good come in higher and you would lose the home and the time and money you put into this.

Regards,

Rob
0 votes Thank Flag Link Tue May 27, 2008
No offense, but your verbal acceptance is as good as the paper it's written on. I don't know the protocol in your state, but here we do not consider it a 'deal' until there is a timed, dated & initialed confirmation. In other words, if you were my buyer and accepted the counter offer, I would not consider it a completed contract unless I had the seller or their agent initial the confirmation of acceptance and send it back to me. What happens if the bank sent out multiple counter offers and multiple buyers accepted? Does this mean you don't have a deal? Not necessarily. Sometimes the banks are really slow to perform their side of the tasks and maybe that is the hold up. Talk to your agent and get the details. This is one of the most important decisions of your life so make sure there is good communication with your agent.
0 votes Thank Flag Link Tue May 27, 2008
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