Review Important Purchase Contract Details with Lender

When reviewing a short sale application, the bank representative will only look for a few things on the purchase contract: the purchase price, a short sale addendum, for all signatures and initials, and a date indicating the validity of the purchase contract. As long as these items exist, the purchase contract will be marked as received, and they will move on to analyzing the other pieces of documentation. However, a purchase contract may contain critical items that must be brought to the attention of the bank representative, because they are critical to completing the short sale process. Be careful not to make assumptions that these other details will work itself out in the end. What are some of these detail items:

Homeowner Association Dues

Homeowners who fall behind on their mortgages will likely fall behind on their HOA dues as well. In states where delinquent HOA dues are in junior position to first and second mortgages, there are some lenders who refuse to allow the payment of these delinquencies from the proceeds of a short sale. This leaves the responsibility of the buyer, seller, or the agents to negotiate with the HOA to come to an agreement on the amount necessary to bring the HOA arrears current. It is recommended that you share with the bank representative who will take responsibility for the HOA arrears. (Note: there are some lenders that allow HOA arrears to be paid from the proceeds of a short sale transaction. Always ask for the lender's policy before submitting a short sale application)

As-Is condition

All short sales are submitted with the understanding that they are purchasing the property in "as-is" conditions, meaning that they have submitted a purchase price that has already been discounted for repairs that are required. The buyer is asking for a discount in exchange for taking on the lender's responsibility for making repairs in the case that they take title through the foreclosure process. For buyer's asking for a discount, they will want to submit supporting documentation such as pictures of the required repairs, contractor estimates, and code violation reports. The supporting documentation will help the lender representative establish a valuation of these repairs, and make the corresponding adjustments to their internal valuation of the property.

Financing Contingencies

The purchase contract may include contingencies, such as qualifying for a particular loan, first time buyer program. If there is a deadline attached to a loan program or incentive program, it is important to verify that the bank will be able to produce an approval letter in time for the buyer to qualify for and utilize this loan. If the lender is not able to meet the timeline, you may very well have to move on to a buyer without this contingency.
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To learn more about how to qualify the best candidate for your short sale transaction visit whbsolutions.com. The number one factor in becoming successful in bank of america short sale timeline, Short Sale Success and Short Sales is to learn how to pre-qualify your deal which includes finding the right buyer.