Today's market (5/13/13) favors sellers as we have rapidly shifted from a buyers market to a strong sellers market. This means, short sellers are typically in multiple offer situations and now have choices on offers to choose from. So which offer should the seller choose? Let's explore two important aspects of a short sale purchase and sale agreement that should sway your decision.
What type of financing is the buyer obtaining?
Financing is a key factor in determining which offer is stronger. Let's lay it out from best to worst in order:
1. Cash 2. Conventional 3. FHA 4. VA
The problem with the latter financing options (FHA, VA, and others) is that they are very stringent on their inspections/appraisals and often doesn't pass their standard because they are federally insured or guaranteed. Cash and conventional is ALWAYS better even if the offer amounts are higher with FHA or VA.
How strong is their 22ss Form?
What is a 22ss form? The form 22ss is the short sale addendum to the purchase and sale agreement.
There are two lines our team at Seattle short sale blog don't compromise and that is,
4. Termination by buyer - Must check the "may not" box. Meaning, the buyer may not terminate the agreement at anytime prior to notice of lender consent (unless after the time period expires). This is VERY IMPORTANT. A couple of years ago, buyers would freely jump from one property to the next. In today's market, they need to be committed to the short sale especially because short sales take 90-120 days to close and many of them lose that emotional high when purchasing homes.
5. Computation of time - Important to check "Deposit of earnest money," "Inspection addendum," "Financing addendum," and "Title contingency addendum."
Let's take the inspection addendum for example. You can either have the inspection done soon after mutual acceptance (preferred) or you can have it done after submitting the short sale package and obtaining lenders approval. After all of that waiting and submitting, what if the buyer loses interest and/or doesn't like the inspection report and walks away from the deal? Get it done early and solidify that commitment prior to moving forward so you don't waste time, money, and energy.
Not all offers are created equal. Agent's and short sellers must understand the importance of picking the offer that contains a committed buyer over the buyer with the higher offer amount.
Hope this helps
Peter
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