Home Buying in Oakland>Question Details

Isam Settles, Real Estate Pro in Oakland, CA

if a buyer puts in a short sale offer well below asking, all cash, as is, and it takes 4 months for final approval, can buyer then change their minds

Asked by Isam Settles, Oakland, CA Tue Oct 4, 2011

without consequence?

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6
The annoying answer to everything real estate is "it depends". It depends on what you stipulated in the offer. If you wrote the offer on the CAR contract with a condition of a period of time to inspect after the bank provides approval, then you have the option of walking away without a penalty during that period of time. Other matters to consider in addition are: did you sign a liquidated damages clause and did the seller ratify it. If you waived your inspection contingency and did not include the short sale addendum, there is a possibility they might be entitled to keep a portion of your deposit. A knowledgable broker should be well versed in these nuances.
0 votes Thank Flag Link Wed Nov 2, 2011
This being in CA, we have a Short Sale Addendum that buyers and sellers sign. Take a look at Paragraph 1 D that states:

If by the Short Sale Contingency Date (i) Seller has not received Short Sale Lenders' Consent satisfying 1B, Seller may in writing cancel this Agreement, or
(ii) Buyer has not received a copy of Short Sale Lender's Consent satisfying 1B, Buyer may cancel this Agreement in writing.
In either case, Buyer shall be entitled to return of any remaining deposit delivered to escrow.

If you have received approval, but you also have certain contingencies/conditions that you haven't released, such as buyer investigation contingency, then you may still cancel and get your deposit back.

However, you have released your contingencies, you have received Short Sale Consent, and then you cancel, you may be liable for liquidated damages.

Ask your realtor to discuss these advisories with you.

Good luck!
0 votes Thank Flag Link Fri Oct 14, 2011
Thank you Scott for providing useful advice. Though others have mentioned that you have a way out, it really just depends. It depends on what your contract states. You may or may not have signed a Short Sale Addendum, and if so, you will have to review what it states. But, all that being said, in most cases, there are ways out for a buyer who is in a Short Sale offer situation.
0 votes Thank Flag Link Tue Oct 4, 2011
It depends what the contract states, if it is an as is offer with no contingincies you may be in torouble, it should at leats be conditional on getting short sale approval. Then you should be able to withdraw up to the point they got approval. For legal matters you should check with your agent or an attorney

http://www.trulia.com/blog/scott_godzyk/2010/10/so_you_want_…

Please see my blog for how a short sale works with tips and advice for buying one.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Oct 4, 2011
Hi Isam,
I agree with Lisa. Review the SSA form and you will see that the inspection period does not start until the buyer receives a copy of the written approval from the seller's lender(s). During the inspection period the buyer can decide to more forward or not (without consequence).
Good luck,
0 votes Thank Flag Link Tue Oct 4, 2011
Hi Isam,
Yes, the buyer can change their minds even without loss of the deposit if they've not removed all of their contingencies. Usually, the buyer doesn't do any inspections or disclosures until the bank approves the short sale. During the inspection time, they can back out for a number of reasons.
Hope that helps you, good luck!!
Lisa Doyle
(925)890-7443
J. Rockcliff Realtors
0 votes Thank Flag Link Tue Oct 4, 2011
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