Buying Distressed Properties

Note:

This document is intended to serve as a general guideline for all offers submitted on short sale properties. Please do not refer or reference this document in a purchase contract as this document is not part of the formal offer. It serves as a guideline and disclosure for buyers, sellers, and their respective agents.

Pricing associated with a short sale or pre-foreclosure property can offer many advantages to a determined buyer. Since the sale of this property will require the approval of a third party (the seller’s lender(s)), there are a number of differences in the way this transaction and escrow must be handled in comparison to a purchase without a third party approval. The purpose of this document is to help prepare a buyer for these differences and serve as a guideline for writing an offer.

Subject to Third Party Approval

Even though a seller may accept the terms of your offer, additional approval needs to be obtained by the seller’s lender(s), mortgage insurance providers and/or government agencies. Once an offer is received by the Seller’s Agent and accepted by the Seller it is submitted to the third parties for consideration. Since the offer and listing terms are subject to approval by these parties, the price, terms, commissions, and other conditions may change.

In the event that a third party involved does not approve of the offer, you may cancel your contract and receive a refund of your earnest money deposit as specified in your offer. Typically if an offer is not acceptable to the lender(s), a counter offer will be generated by them but not always. The third party review process can take a few weeks to complete or longer with multiple lenders involved. Please understand that this delay cannot be avoided and should be understood as part of making an offer on a short sale property.

Timeline for Third Party Approval

Third party review and response times vary depending upon the particular circumstances. Some of these circumstances include internal policies of the third party, their current workload, whether or not PMI approval is required, and the time required to complete a BPO or independent appraisal. From past experience, the time required to obtain third party approval ranges from one week to several weeks and on some occasions much more than a month. We will do everything possible to expedite the process and keep you informed of the progress. Your patience is appreciated.

Commissions

In the event a reduced commission is required by the lender(s) to make this deal go through, the listing and selling agents agree to share equally in the reduction of their respective commissions.

Closing Costs

Among other incentives to the seller, the benefit in a short sale transaction is often to avoid certain closing costs associated with the sale of the property by having these costs paid at closing through proceeds of third parties. As a general rule, the buyer in any short sale must pay all non-customary negotiable expenses.

Property Sale in “As-Is” Condition

The property is being offered in “AS IS” condition. You are encouraged t do inspections prior to writing the offer to determine your satisfaction with the condition of the property. It is typically not possible to get third party approval for repairs. Should the buyer’s lender require such repairs to be made, it is important to note that estimates of these costs must be received with the offer to ensure that they may be included in the Estimated Net Sheet sent out for third party approval.

Offer Submission

Please take into account the following conditions for offer submission

• A buyer lender pre-qualification letter.
• A signed copy of this disclosure document
• A purchase contract complete with the buyer Short Sale Addendum
• A copy of the deposit check
• An Agency Disclosure