Short Sale SellersBacking Out of Escrow
A commonly asked question is, Can a Buyer back out of escrow prior to receiving written letter approval from the lender?
If you included a Short Sale Addendum (make sure you do) it will clearly state that the buyer can continue to look at other properties and cancel at any time, protecting both the buyer and seller. The Short Sale Addendum will specifically state an option for choose that escrow does not open and the earnest deposit is not deposited into escrow until there is approval from the lender. Also, no inspections will be performed prior to the lender formally agreeing to the short sale transaction. You must make sure that the short sale offer is contingent on the Lender Approval to avoid sticky situations. I
If a buyer removed all contingencies up front (not recommended), then canceling escrow may result in a forfeiture of the earnest deposit.
It’s important to note that a sale will usually include contingencies for a home espection, home association docs and financing…giving a buyer multiple chances to cancel the transaction, if none of those contingencies are signed off by the buyer.