Short Sale Contengency Tip
Recently I found that there are still some short sale listing agents out there who do whatever they want.
According to local MLS rules, upon execution of the contract, the listing agent must change the STATUS of the listing from ACTIVE to ACTIVE CONTINGENT ie. the property is sold pending seller’s lien holder release contingency.
Also, a contract is a legally binding contract between a seller and a buyer. Upon agreement and execution of the contract, the seller has technically sold to the property to the buyer, depending specific performances of the contract.
Should the seller accepts another offer, the 2nd contract should sit in back-up position. Here in Texas, we include a Back Up Addendum along with the contract.
The seller has only 1 property to sell and the seller cannot sell the property twice, each time to a different buyer.
The SHORT SALE Addendum is a great addition to the Texas Real Estate Sales Contract. It specifically said that the buyer must deliver the Earnest Money and Option Fee checks to the respective parties upon execution of the contract. But that’s all the buyer must do until the seller receives a short sale approval from the lender.
Under Paragraph C of the SHORT SALE Addendum, it specifically said that buyers have no other performances on the contract until short sale approval. Paragraph F gives the Buyer the unrestricted right to terminate the contract until as specified under the Termination of Option Period in the Original sales contract.
A Short Sale negotiator’s email with comments, “The offer looks good” does not constitute to a short sale approval, although I agree that it could look promising.
A Short Sale approval must be made in writing with specific conditions spelled out in the letter.
Simply because there is a mortgage insurance on the property does not mean that the short sale approval is automatic.
Sales contracts are written in black and white. Either you do or you don’t. No ifs or buts.
In every effort in getting the property sold, all parties involved must work together. Buyers, buyer’s agent, sellers, and seller’s agent.
It is VERY IMPORTANT that both buyers and sellers understand the contracts they are signing. If they dont, a real estate attorney should be consulted. Hence, hiring an experience short sale real estate agent is crucial in ensuring this process goes with minimal glitches.
Post written by Loreena Yeo
