Deal Breakers… How to Avoid Them & Close the Escrow…!

When a listing agent receives a purchase offer for one of their short sale listings, they need to review it very carefully and attempt to call out the deal breakers..!

 

Recently I have been surprised by some agents that were not aware of the various fees& closing costs that their short sale lenders will not pay; here’s how to avoid these surprises…

 

 

First, once you recognize a possible deal breaker, discuss it with the seller’s as well as the buyer’s agent. After all, you do not want to spend 6-12 weeks on short sale negotiations only to learn that the buyer will not move forward because you didn’t deal with a "deal breaker" at the beginning of the transaction.Here are some (but not all) of the possible deal breakers that the agent may see in the purchase contract:

Pest Control. Short sale lenders often approve pest control inspections, reports and repairs. However, sometimes they only approve a portion of that amount (or sometimes nothing).
Home Warranty. California is big on home warranties in their purchase contracts. Most banks do not approve home warranty as part of the short sale.
Buyer’s Closing Costs. It seems to be coming increasingly more common for buyers (especially those seeking FHA financing) to request closing cost concessions. This is another item that may or may not be approved by the short sale lender.
Homeowner’s Association. HOA dues transfer and document fees may be paid for by the lender. Often outstanding HOA dues may not be covered in full.
Local City Inspections & Repairs. Often required by local municipalities; most lenders will not pay these fees.

So, what happens if the buyer is requesting some of these items on the short sale purchase contract? Since there is likely no way of knowing whether these items will be approved by the short sale lender until much later in the transaction, it would be ideal to clarify in an addendum or a counter offer that approval of these items by the bank is not a contingency of sale. This way, if the bank does not approve the home warranty or the buyer’s closing costs, the deal can go on. “I’mjustsayin’ TEAM ShortSale”