Are you the buyer? Is it an approved short sale that has to be re approved with you as the new buyer? Please provide a little more detail so we can help.
What "addendum" did you sign? Is this an addendum that included the "approval letter" from ALL lenders. Or is it merely a Short Sale addendum?
DO NOT put up any money in escrow UNTIL you receive the approval letter from all lenders. Otherwise it may be difficult to get your deposit back if the seller doesn't get approved for a short sale or decides to sell it to someone else. You may have to bring a lawsuit to get your deposit back. I know of a case just like this and the seller was a formerly licensed Realtor and he actually tried to get the buyer to give up half of his deposit on the house. That buyer had to file a lawsuit to get his money back!
Once you get the approval letter in your hands and with a special addendum that the seller would sign agreeing to the terms of the short sale approval letter, then you would pay for an appraisal and hire a home inspector.
While you're waiting for short sale approval you need to continue looking for properties because there is no certainty when or if this will ever close. Your contract should have the right to cancel without any penalty up to at least 5 days "after" you get the lenders Short Sale approval letter so you should be able to cancel if you find a better property.
Hope this helps.
All my best,
Alma Rose Kee, PA
Future Home Realty
Want to hear the reality answer? Get ready to learn the meaning of "A Clown Car Full of Horrors!"
They have not been given the name Long Sale for nothing!
You are likely in for a very frustrating, long, dragged out process over 8 to 10 months to find out in the end that you are paying full market value for the home.
These banks are not allowing the owners of these homes walk away for so much of their debt AND sell you the home less than market vale too!
You need to keep your options open, find a good re-sale where you can have all your closing costs paid for you and lock in a rate while they are so low!
Pro Option Mortgage/ Florida
Ph: 888 662 4404
Prior Service U.S. Marine Corps
Darla provided an excellent detailed answer. Are you working with a Realtor who is experienced with short sales? It can be a lengthy process to get to closing. When you refer to approval, do you mean from your lender, or from the seller's lienholder? Full approval from a buyer's lender is actually the very last step, prior to closing. It occurs when all of your documentation and proof of funds have been verified, and all other conditions, such as appraisal, lender-required repairs, woodrot/termite treatment have been addressed, etc. Each transaction is different, and there are different requirements for each type of loan. The seller's lienholder has to approve the contract price, since they are accepting a deficit on the loan. Hopefully, the seller is aware that he/she may stil be responsible for bringing funds to closing, even on a short sale. Best of luck!
However, your seller could also be involved in the Home Affordable Foreclosure Alternative (HAFA), a Federally subsidized program which became effective in April 5, 2009 (August 1, 2009 for Fannie Mae/Freddie Mac owned loans) and provided a more stream-lined short sale process. If it is a HAFA short sale, the owner's lien holder would have completed an appraisal and set a pre-listed price they would accept at the time the property was initially listed for sale. Then there are very defined time-lines for the lien holder to complete their review and approval of a new buyer and the sale should be completed much faster than a typical short sale transaction. Your lender would also more than likely require their own appraisal to be completed during this process.
Hopefully you're working with a real estate professional who can keep you informed all the way through this process. Good luck on your property purchase!