Short Sale contracts and Earnest money?
May 6, 2008
Many buyers are writing contracts to purchase homes or Real Estate that is being offered as ‘short-sales‘ . Standard practice is to have earnest checks (or a copy of) attached to the offer.
However, in the case of many , short-sales, as we have discussed in the past, they are not yet “approved” short-sales by the bank who hold the deed of trust to the subject property. Thus, should earnest money be deposited in escrow to bind the contract.
Let me give you an example.
Mr & Mrs. Buyer make an offer to a seller who is representing his home as a short-sale.
The seller, happy to receive an offer, accepts. Thus, a meeting of the minds has been reached between the parties. Thus, escrow should be opened immediately and earnest money deposited. Right? wrong!
In the case of a ‘short-sales‘ in which the bank has not yet approved the ‘short-sales‘ and issued the necessary pre-approval through an “Agreement Notice ” escrow does not need to be opened and earnest monies do not need to be deposited.
In fact, from what I understand, there are Title companies who are charging if escrow is opened and the bank does not accept the offer.
and so you are aware, the AAR (Arizona Association of Realtors) is in the process of coming out with a ‘short-sales‘ addendum which will spell out and clarify many of the issues surrounding ‘short-sales‘ to protect both buyers and sellers.
However, … AAR’s revised ‘Short Sale Addenda‘ will not be out until August 1st.
Short sales are not like standard transactions.
Be careful, have your realtor check for an “agreement of sale” so you know best how to proceed with offers, seller acceptances, title and earnest monies.
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Copyright © 2008 By James Wexler, All Rights Reserved. *Short Sale contracts and Earnest money?*
Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs.
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