In a short sale the offer is subject to inspection unless the buyer has opted to waive the inspection just like any purchase and sale contract. I would advise to have your realtor write in the offer that this offer is subject to the inspection after the bank has approved the short sale. If you spend the money to have an inspection and it is too costly for you to make the repairs , if needed, then you are out the cost of the inspection and do not want to purchase the property. However, you may loose the purchase if you do this as the bank or mortgage company will take the least troublesome offer that is equal to yours. Sometimes this transaction is a bit confusing but you usually end up saving yourself a lot of money.

It depends how you write up your offer. As you can see in the other posts here, they all have some good valid points. First, it depends on your state and their regulations. Second, it depends on your offer. Normally, you would do an inspection right after mutual acceptance. However, If I am buying a short sale property, I would do an inspection after lienholder approval. Especially if the lieholder is requesting back up offers.

If your offer specifies that the lienholder cannot accept other offers then go ahead and do a inspection. Otherwise you may end up throwing away a couple hundred dollars. Again, it all depends on the offer and what it is agreed upon.

Good luck and have patience with short sales. They take time, but you can get some good buys if everything works to your favor.

While Kary has a valid point that the contractual short sale process varies from state to state and that the answer may vary based on specific local forms, you can still address these time frame issues in an addendum.
And with CA one of the leading states in the country suffering from foreclosures, I have represented more buyers in short sales or REO transactions than in traditional sales, sadly. When I represent buyers, my job is to protect them in the purchase process while still getting them a safe, great house at a great price. In all good conscience, I can never reccomend that buyers put out any money on an inspection prior to the bank having given written acceptance. Once that bank approves, the inspection is done ASAP. But, we have seen other buyers go through inspection after inspection only to lose the house because the lien holder will not approve the price. So yes, the transaction is still between the seller and the buyer,but the bank still has to approve it before moving forward.
I do highly agree with the recommendation to work with agents (on both ends) who are experienced in the short sale process and are informed. Best of luck!

First, I would caution agents from other states about answering these types of questions, unless they're familiar with the forms used in our area. This is almost certainly an answer that is dependent on local forms.

Second, I'd agree with Debbie and James, except that with respect to Debbie's answer I wouldn't be so likely to recommend that the buyer do an inspection. The percentage of short sales that go through is simply too low, but she is right that an inspection is relatively cheap. The problem is the bank could say no to the price, could insist on a higher price, or could approve another sale entirely. So I'd be more likely to suggest setting up the transaction in a way where the inspection is done after the bank's approval (e.g. form 22SS).

Hi Yogi,
This is a very good question. The answer to your question is, it depends on how it is written into your offer. There are differing opinions as to how it should be written into the offer.
Some points that are taken into consideration when writing or accepting an offer are:
1. If a seller was to agree that a buyer will conduct an inspection on the property AFTER the lien holder has given their approval of the offer- then the seller is running the risk of the buyer walking away from this transaction after waiting 60 to 90 days of his home being off the market waiting for lien holder response. This is risky to the seller in that the majority of short sales have an auction date looming 30 to 90 days from the time they had put their home on the market.
2. If a buyer conducts her inspection upon buyer and seller mutual acceptance than the buyer runs the risk of the lien holder not approving the short sale and she is out $250 - $350 for an inspection fee.

The mistake a lot of people including agents make is assuming that the lien holder owns the home and has the final say. Legally, the homeowner is still the owner of this property and ultimately makes the decision if they are going to sell albeit with lien holder approval of the short being offered to the lien holder.

In my opinion and it is just that - my opinion - a buyer should conduct their inspection at the time of seller and buyer mutual acceptance. I don't believe a buyer should be out looking at homes to buy if they can not afford to pay an inspection fee or two if needed. Decide if you want the house and then wait for the approval. if it is a decent and reasonable offer 9 times out of 10 it will be approved. Work with agents and sellers that are well informed.

Your contingency periods in which you do your inspections begin when you have written approval of your offer. You want to ensure you are protected by having your agent complete a short sale addendum or include the proviso in a written addendum.

It depends on how it's written in your offer paperwork. If you're using the local NWMLS forms and you've attached the short sale addendum, it basically says that mutual agreement is after the lender agrees to accept the short sale offer (it uses different words but you get the idea). The inspection timeline (as well as most of the other timelines) all trigger on when mutual agreement is.

In a short sale you do not have an offer accepted until the bank approves; you would want to wait until you have this to spend money because if you don't reach agreement you are out the money.

Hi! Usually the inspection process starts as soon as you have an accepted offer. In a short sale, the accepted offer is determined by the 3rd party or bank holding the mortgage. Any acceptance by the seller is contingent upon the 3rd party's acceptance of it. Usually, you have a period of, for example, 14 days to get the inspection process completed.