How do you write a short sale contract? I will be using TREC forms, where do I put the clause subject to lender approval?
y
I discussed this a few years back with a TAR attorney, which is a great resource…Get in the habbit of using them…This is actually a problem in Texas as you’ll soon see. That clause “must” be included in section 11 of the TREC contract…Summit is correct as it is implied, but according to the attorney if this clause isn’t in section 11, then the seller has agreed to something that he can’t do…It is not his decision to accept an amount lower than he can pay. That decision is left up to the lender, not the home owner…
Now, here’s the problem…If it is subject to lender’s approval, then there is NO contract…I had a lender (Countrywide) that actually accepted another offer and then told me that they were not a party to the contract that I had presented and had never approved the short sale…So, where was the contract? The home owner can’t be held accountable, so the buyer lost, I lost and the home owner that I was working with lost (actually won a bit later as Countrywide accepted another offer, which came from another buyer that had made an offer through Countrywide, not me, and Countrywide in essence cut me out of the deal)…I guess I could have stood in the way of the deal as I had a signed listing agreement with the home owner, but was advised by an attorney to let it go.
According to the TAR legal staff, this statement must be included and there is NO contract until the lender approves the sale…And it’s almost impossible to put a date for the lender to respond, because the lender is not a party to the contract…This makes short sales difficult in Texas…But that’s TAR’s opinion…
I’d love to read what some of the top guys on the forum have to say and I’d love to learn something different…
Oh yea, and keep in mind that because one is an attorney doesn’t mean they know it all…
Ken, first I am out here in the little state of California, why not make the agreement subject to the seller approving the terms and conditions of the lenders short sale requirements.
BTW with the new crap lenders are putting into their short sale approvals with the sellers I would never write an offer subject to the buyer approving the terms and conditions…
As far as a time issue I include the following in each of my contracts…The Buyer shall have the option to extend the closing date extended for up to 365 days upon receipt by the Seller or Sellers Closing Agent of an amount of one hundred dollars ($100.00), to be applied to the down payment on the property.
I also include the following In the event that the buyer deems it necessary to adjust the purchase price, either as an increase or reduction, said adjustment may be authorized at the sole option of the buyer. This always comes in handy when the lender adjust the price…
Thanks for the replies. I had already put the clause in section 11. Would getting a listing agreement from the seller be a good option?
BSP,
You need a listing agreement to protect yourself, especially if you’re a Realtor and trying to sell the home. In fact, you can’t put the home in the MLS unless you have a listing agreement, especially in the state of Texas…
Michael, always good to hear from you…I love getting ideas from others, especially when they know what they’re doing…I like your response better than what I was told years ago in Texas…One way says subject to seller’s lenders approval…Your says subject to seller approving the terms and conditions of the lender’s short sale requirements…Yours is better. No doubt about it…
I also like your statement “The Buyer shall have the option to extend the closing date extended for up to 365 days upon receipt by the Seller or Sellers Closing Agent of an amount of one hundred dollars ($100.00), to be applied to the down payment on the property.” But a quick question…Any reason to go for 365 days? Just curious…
You’ll have to forgive me as I’m accustomed to working with foreclosures and at least with most of the REO agents in the area, the banks keep “ALL” the options, so needless to say Im intrigued that a bank would allow the following: “said adjustment may be authorized at the sole option of the buyer”. Do you have success with this, or is it generally striken by the lender? Again, just curious…
Got some serious reading to do, so back to work…
Its in all of my contracts… Which is why its 10-12 pages…
the 365 is there in case I need a long escrow period… I have had SS take 10 months
The homeowner wants to make some money on the deal. I know the banks wont let it happen. How do I work this out? is it ok to give cash to the seller after closing?
Use a Bill of Sale and buy something off them. Usually it’s best to buy something that has no set value… like baseball cards. Hope this helps!
BSP youll fid that lenders are allowing a small sum to be paid to the seller to more and keep the home maintained, I have seen up to 1000… When there is an arms length transaction they will pay a fair amount…
The real issue is why pay the seller at all…