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Up front - I want to double check what my realtor is telling me and yes, I will also be speaking to my RE lawyer tomorrow too. Just want some background info and a better feel for a situation.
House is 150 years old and was renovated in the late '80s. Came up listed as a short sale at quite a bit less than earlier failed listing prices. We had some interest with a few reservations as the sellers agent "didn't have" the disclosures and surveys. Seller was looking for "last and best" so we made an offer.
According to our realtor, to qualify for a short sale, the sellers need to prepare a financial package and present it to the bank for approval. After bank approval, it goes to market. It turns out that the sellers have not done this, the bids were put out (to show the bank the market rate?). Realtor now says this happens sometimes (would have been nice to know in advance).
Anyway, the sellers picked our bid, signed the contract and insisted on going into attorney review immediately, which I found strange as they still don't even know IF they can sell the house at the price they accepted. Eventually they handed over the site plan and lead disclosure (marked "don't know") but nothing else.
My concern is that I feel herded to buy a property about which I know absolutely nothing and may end up spending money on surveys, lead tests and inspections on a house that the sellers may not even be allowed to sell at the price they accepted. How do I build in contingencies? If I go through AR and into contract, should I be inspecting the property immediately? Does the 10 day lead test rule apply? Will I be locked in and at the mercy of the seller and the sellers bank for a long time? What if we go under contract, everything grinds to a halt and i find something I would prefer? Who would I even negotiate with if we find extra issues with the house (it is 150 years old after all) outside of the obvious updates it needs (furnace, windows etc.)
Yes, there is always a risk, but I prefer to at least mitigate the risk as much as possible with some smart choices and protecting myself contractually.
Appreciate any insight into this process. I picked an agent with experience and Short Sale certs but this added a wrinkle she hadn't seen before.
You are locked into the contract for however long it says you must wait before you're allowed your complete deposit back and any liability to the seller. I know in my contract, the sellers lawyer stipulated we wait 150 days before being able to back out and have all money returned with no further liability to the seller. You may or may not have similar language in yours.
Yes you take a risk in losing money on inspections and stuff done before a bank decision. This includes if you want to cancel out and go after another place. All depends how the language is in your contract about this.
But yes the process does go more or less the way you described it. I know we spent $400 on a condo inspection after we completed attorney review. Our contract allowed us to back out if anything really wrong was found during the inspection.
Good luck...there's lots of stuff on the web out there about short sales that I would read up on as well.
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