Foreclosure in Revere>Question Details

Erin, Home Buyer in Revere, MA

We have recently placed a bid for a short sale property. Is it unusual that we are being asked to sign a?

Asked by Erin, Revere, MA Wed Aug 20, 2008

purchase and sales agreement before the bank approves the sale? We already had to do the inspection too.

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There are too many variables to approach every short sale the same way. All banks have their own set of rules and the bottom line is that if this is the house that you want then you need to play along and have an attorney review everything to keep you safe.

I currently have three short sale offers in, two of which have been in for over a month. All have a different set of rules laid out by the bank, One is the buyer's second attempt at a short sale. We backed out of the first one because the bank requested that they sign a blank mortgage application even though they were already pre approved. Our fear was that they would shop the mortgage around causing my clients credit to be pulled several times and lowering their credit score.

Again, many banks only accept a signed P&S as an offer. They need to legally give you the right to have an inspection however; if they want you to do it before making an offer and you really want the house, I think your buyers agent was correct in having you go through with it. It is a small amount of money to spend on peace of mind.
0 votes Thank Flag Link Thu Aug 21, 2008
There is a specific Addendum for short sales that should be part of your P&S. It covers most of the issues regarding the short sale, and protects both the seller and the buyer with withdrawal dates etc. I recommend including it with offers even though it is tltled an Addendum to a P&S. The form is available through the Mass Association of Realtors. Your buyer agent can get you one.
0 votes Thank Flag Link Thu Aug 21, 2008
Hi Erin,

That’s highly unusual, especially if you have a buyer agent. Without the banks approval, my experience is that the contract is not legally binding until it’s mutually agreed upon in writing by “all parties”. That’s why short sales are “subject to third party approval.” (the lender). Regarding already conducting the home inspection, in my opinion the buyer shouldn’t make any investments until they know it’s a viable transaction and you don’t know that until you have the approval in hand. I have seen many banks reject short sales.

Best of Luck!
0 votes Thank Flag Link Wed Aug 20, 2008
Hi Erin,
It's not all that unusual. Massachusetts is one of the few States that uses a Contract to Purchase prior to the Purchase and Sales. Most Places go right to Purchase and Sales. Ordinarily they will not allow any changes to be made but I would still have a Real Estate Lawyer look over it to make you better aware of what you are signing. Good Luck!
0 votes Thank Flag Link Wed Aug 20, 2008
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