What is the Short Sale Addendum?

short sale addendum image 220The Short Sale Addendum, a one-page document that you’ll sign, addresses complications that potentially cam arise from a short sale.

The Addendum is designed to protect you, the buyer, from locking your contingency periods and good-faith deposit onto the bank’s timeline.

My favorite parts of the Short Sale Addendum are items B1. and B2.

B1. States the time period “for inspections, contingencies, covenants and other obligations (i) shall begin as specified in the (Purchase) Agreement; or (ii) (if checked) [] shall begin the Day After Seller delivers to the Buyer written notice of Short-Sale Lenders’ consent.”

Duh. Of course you don’t start your clock ticking until the lenders’ approval. It is crazy that the default is not checked!!

B2. States: “Buyer’s deposit check shall be: (i) immediately handled as provided in the (Purchase) Agreement; or (ii) (if checked) [] held uncashed until the Day After the Seller delivers to the Buyer a written notice of the Short Sale Lenders’ consent.”

B2. This is where a buyer must make a choice:

  1. Do I want to hold my good-faith deposit in escrow for two to an unknown number of months?
  2. Do I want to just put a small deposit into escrow to show the seller a commitment to the deal?
  3. Do I not want to deposit anything and risk that the seller will pick another buyer who is willing to put their deposit into escrow?

What do you think?

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