Are we in escrow on this short sale yet?

Asked by Sarah Gee, Mariposa, CA Sun Apr 25, 2010

Some friends of ours are selling their house as a short sale in California. They really want us to buy it, and we do, too! It was listed at 209k, we offered 190k, and they accepted. All parties signed a contract... with contingencies. Contingencies include home inspection, pest inspection, and approval from seller's bank. My question is: are we in escrow yet? (Time IS of the essence: we need to be in escrow by April 30th in order to qualify for the federal tax credit.) Thanks!

Help the community by answering this question:

+ web reference
Web reference:

Answers

3
Pacita Dimac…, Agent, Oakland, CA
Sun Apr 25, 2010
Sarah

Go ahead and open escrow ---- more evidence that both parties have reached an agreement subject to lender approval.

Although your initial deposit will be transferred into an escrow account, as long as you don't release your contingencies (buyer investigation, loan appraisal, loan approval) you can back out and get your initial deposit back, or in case the short sale isn't approved.

If the listing agent has told your agent that the lender has approved the short sale, document your conversations or communications which are driving your decision to open escrow.

Good luck!
1 vote
Sarah Gee, Home Buyer, Mariposa, CA
Sun Apr 25, 2010
Pacita: first, thanks for the info. Second: the status of the seller's lender's approval is up in the air. My agent assured me that yes, this was the fastest approval on record (we put in the offer Friday morning and agreed to and signed their counter-offer Friday night). I asked "so... has the seller's bank approved?" And she nodded, almost in disbelief. (FYI, the sellers are working with a local credit union, which is a bit more expedient than your average mega-bank) She assured me that the listing agent told her he would open escrow first thing monday morning, which made her think that everything with the credit union was already worked out. However, I haven't seen any documentation verifying the lender's approval. All I know is that I have a copy of a contract between us, the buyers, and our friends, the sellers, that agrees to the sale with a few contingencies. (One of these contingencies is the approval of their lender, of course.) I'm thinking that if we send a copy of this contract to the IRS next year when we file our taxes, there's nothing that disqualifies it (i.e. it IS a binding contract.... with contingencies.) Any more words of wisdom with this new info? Thanks again!
1 vote
Pacita Dimac…, Agent, Oakland, CA
Sun Apr 25, 2010
Has the lender approved the short sale?

Did you and/or your realtor submit the complete short sale package to the lender or lenders?

The definition of "binding" contract may be open to interpretation because the final disposition of your contract is dependent on tthe short sale approval.
http://www.irs.gov/newsroom/article/0,,id=215791,00.html

If you google "binding contract to buy a house" you will see a lot of opinions on this. You may want to consult a real estate attorney for the answer that you can present to the IRS if it's challenged when you file for your tax credits.

Regardless of your inspections, and regardless of whether or not you deposited your initial deposit into an escrow account, if you don't have a formal approval and acceptance from the short sale lender, there are no guarantees about this short sale.
1 vote
Search Advice
Search
Ask our community a question
Home Buying in Mariposa Zip Codes

Email me when…

Learn more