Just got my first offer accepted on a short sale! What now?

Question

I'm about to lawyer up through some suggestions from my realtor. The house seemed like a good deal at their asking price so I offered that. Only afterward did it come up that it was a short sale. So I have some questions:

- What should I be asking the lawyers when I interview them?

- How does the short sale nature of the deal affect my closing costs? (I'm expecting a long time until close)

- Any other suggestions?

Thanks BP!

Crystal Smith · Answer

Whether's it's your lawyer or an agent the questions you should ask

• Who accepted the offer;  the owner of the property or the bank?  You really don't have an accepted offer until the bank accepts it.
• Assuming it was the owner, was the list price set by the owner or the bank?  If set by the owner w/o agreement from the bank then you can expect it will take many months to close.  If the price was agreed to by the bank then your expected time to close will not be as long
• You want the option for multiple inspections before closing to ensure that the property isn't materially different than when you made your offer.  We've cancelled short sale deals when the bank and/or owner refused to let us see if there were any changes to the property.  
• Earnest Money Deposit- Given this is a short sale any EMD you provide will be tied up for a long time.  Get you agent and/or lawyer to minimize the EMD
• Short sale has zero impact on your closing costs.  Depending on how anxious the bank is to get the property off their books you may consider asking for closing cost concession from the bank @ the appropriate point of the transaction

Steven Booty · Answer

My bad, there was an addendum on the contract. My agent went over it with me. I'm pretty sure lawyers are required participants in RE transactions in NJ

Wayne Brooks · Answer

A lawyer does nothing for you as the buyer in a short sale.  How the heck could your agent not tell you it's a short sale before offering, especially since there are required addendums for it?  It doesn't affect your closing costs, unless there are some liens the lender won't cover in full, and you'll have to chip in...this should have been discussed with you by your agent....as well as not to expect the bank to accept a greatly reduced price, the asking price has no relation to the price the bank will take, how many and what type of liens are on the house to help determine chances of success, etc.