My last blog post entitled “Eliminate Short Sale Surprises” discussed the Counter Offer, one of two critical (but often forgotten) documents you should use when working on a short sale as the listing agent. I hope you enjoyed it.

This email will discuss the second of these two documents, the Post Short Sale Approval Addendum, which when used with the Counter Offer will help you get more short sales to the finish line in a timely manner and avoid risk for all parties.

Let me ask you this:

• Do you have misbehaving buyers when you get into escrow?
• Do you have buyer’s lenders who don’t tell you the truth and/or waste weeks of your time?
• Do you work with buyer’s agents who like to blame everyone else for delays or have no control of their client?
• Do you want to protect your seller, protect the timelines and protect your short sale approval?

Then you’ll LOVE the Post Short Sale Approval Addendum.

What is a Post Short Sale Approval Addendum?
No, this document isn’t just another excuse to add more paperwork to the file.  In fact, it’s a very important part of the short sale timeline and legal puzzle to keep all parties in compliance and following the signed contracts. Unfortunately, most agents have never heard of such a document or ever thought of using a similar addendum to accomplish what this little gem does for you. Believe me, once you use this, you’ll never do another short sale without it.

The Post Short Sale Approval Addendum does the following:

1. Contractually establishes that the seller has read, approved and signed the short sale approval letter and all other junior lien settlements (Remember, these are null and void until the homeowner agrees to all their terms and conditions.)
2. Reminds all parties (because it’s been at least a few months) of the agreed contingencies, timelines and other important contract terms (i.e. late fees/penalties, release of EMD, etc.)
3. Legally starts the contingency period time clocks for the buyer upon the homeowner’s acceptance of #1 above
4. Establishes the exact escrow close date (or sooner) that the transaction must close per the contract
5. Let’s you clearly set the rules (particularly if set about in the Counter Offer) of how you want the escrow period to go and all parties to behave.
6. Allows you to create some breathing room in the escrow period (should some bumps occur) without disrupting the short sale approval timelines

“So Jordan, this sounds complicated.  How do you do this?”  Not really, it’s very easy.  Once you get short sale approval from ALL lienholders, create an addendum with some of the following verbiage:

“This Addendum shall serve as Buyer’s notice that Seller has received, agreed and approved all terms and conditions of short sale settlement form all lienholders. Buyer’s contingency periods (and any other important contract terms) are to begin (“date”) and will expire (“date”).

Close of escrow is to be on or before (“date”). All parties are aware that any extension beyond the close of escrow date may not be granted and Buyer is at risk of forfeiting EMD should buyer be the cause of delays.

Final approval of sale is subject to short selling lenders’ review and approval of final HUD.”

There are many other terms you can add to this Addendum, but this should give you a good start. Other tips:

• Remember to give yourself some breathing room between the close of escrow date and the expiration of the short sale approval letter(s).
• Have the homeowner sign and date every page of all short sale approval letters and negotiated settlements.
• Have the homeowner sign the Insurance Premium Refund Waiver (if needed) at the time they sign approval letters so you don’t have to chase him/her down when time is fleeting.

I hope these suggestions were helpful. Please feel free to contact me with any questions or to find out how we can help you close more deals this year.