In a short sale the sale is subject to approval by the seller’s lien holders. Without that approval, the seller cannot close and you cannot purchase that home.
Your contract should include a Short Sale Addendum. The short sale addendum will stipulate how long you the buyer are willing to wait for the seller's lender(s) approval and other short sale terms.
Short sales are typically being sold “as is with right to inspect.” The seller does not have the financial ability to pay for repairs to the property if repair issues are found during your inspection period. For this reason, short sales may not work for buyers that are using VA or FHA financing.
After the contract and short sale package have been submitted to the seller’s lender(s), your next step is to wait. If there’s only one lien holder, it typically takes less than 2 months to get a response. If there are multiple lien holders, it may take 3 - 6 months or more for all parties to respond. If any one of those lien holders say no to the terms of your contract, the sale cannot be completed.
Once the lenders and/or lien holders have given approval for the sale to proceed, they usually give a date upon which their acceptance expires. Often this deadline is 3 weeks or less. As a buyer of a short sale, you must have patience to wait for that approval, then act quickly to do inspections, obtain your financing and close.
Diane Christner, Realtor, GRI, SFR, CNE