Once the deal is approved you’ll get a letter from the lender stating the terms. As for the deficiency, you should have place the following stipulations in the contract:
“Offer contingent on seller securing written approval of a short sale from xyz bank that is acceptable to buyer. Offer contingent on lender waiving any deficiencies that result from the short sale as they relate to the seller.”
If you have not already included it, just fax an amended contract to the bank with the statement.
After further research I am confident that keeping deficiency language out of the contract is the right way to go.
Get an agreement off the record from the bank about not persuing a deficiency and file the paperwork.
This way the buyers does not get scared off and everyone who has to know does know that the deal is going nowhere without a write-off included in the final approval letter and terms of sale from the bank.
No, everything in a short sale has to be on the record. The goal is to protect the seller; the buyer could care less what kind of terms the seller got. If you can’t get it in writing from the bank, the seller is at risk of a huge collection for the shortage.
You also want to resolve the issue asap because of the fact that banks will often change the loss mitigation representative without notice. What happens if the loss mitigation rep that you have been dealing with quits or is fired and you only have a verbal agreement? You have to start over with someone who may or may not even care.
If your seller doesn’t see that he or she is protected from the shortage, there will be no incentive for them to go to the closing to seal the deal and get you paid.