Short Sale Home » Short Sale Buyers » Short Sale Addendum

When making an offer on a short sale, it is very important to give flexibility to the short sale buyer to back out of the purchase agreement if the lender takes too long to approve.

In November of 2007, the California Association of Realtor added a short sale addendum to the required forms.  It is one of the best forms and goes quite a long ways in protecting the buyer from entering a deal they have no control over.

The short sale addendum, will limit the amount of time a buyer has to wait to hear back for a lender written approval, also known as the ‘Short Sale Contingency Period”.  If the lender fails to respond during the noted time period, the buyer can walk away from the deal.  It can also be specified when the escrow is to start, with most buyers choosing escrow to start after lender approval.  It’s a good way of avoiding tying up your earnest deposit for 3 to 6 months in a limbo escrow account earning no interest.

Thirdly, the short sale addendum states that the short sale escrow timeline to start after the approval of the seller’s lender(s).  This addendum places a lot of buyer’s worries on the shelf and protects them from staying in a deal that may not go through.  If you are making an offer on a short sale, make sure your realtor includes this addendum into the purchase agreement.

Tags: addendum, short sale