How to Fill Out a Residential Sales Contract for a Short Sale Offer

A residential sales contract is an offer to purchase residential property. The buyer completes the contract and submits the offer to the seller. In a short sale, the current property owner is the seller. Yet, because the seller is selling short, meaning accepting less for the property than what the seller owes, the final approval comes from the lienholders. Completing a residential sales contract for a short sale is typically the same as completing a contract for a non-short sale. If the seller accepts the offer, the offer then goes to the property’s lienholders, who accept, reject or counter the offer.

Instructions

1. Print your full, legal name in the space on the contract for the buyer, if you are the buyer. Include the names of any other buyers participating in the offer.

2. Include the price you are offering for the property, and the amount of earnest deposit you are offering. Explain the terms of the payment and what happens to the earnest deposit during escrow and if you cancel escrow. Sellers and lienholders will typically want you to show where the money is coming from and for you to include a loan approval document, if you are borrowing funds for the purchase.

3. Identify the property you are making an offer on by including the legal address and physical description, such as tract, block and lot numbers and parcel number.

4. Request a specific deed type you are offering to purchase, such as a general warranty deed. Normally the seller purchases a title insurance policy for the buyer, according to the requests made by the buyer in the offer. This protects the buyer, should there be future claims on the property after escrow closes.

5. State any contingencies or events that must occur before the contract becomes binding on you. For example, you might ask for an inspection period, or for the offer to be contingent on a specific appraisal amount.

6. State a deadline date for the seller to accept the offer, noting that after that date the offer becomes void.

7. Add a short sale addendum to the offer. Some states have prepared short sale addenda. This acknowledges the fact the offer is contingent on approval by the seller’s creditor and specifies a specific amount of days the seller must submit the accepted offer to the creditor.

8. Include a contingency stating that until the creditors formally accept your offer, you have the right to cancel the offer without penalty, with the earnest deposit returned to you.

Tips & Warnings

• Residential sales contracts can vary by state. You might use a standard, pre-printed contract or have your attorney prepare the contract.

• Consult with an attorney or real estate licensee for assistance in completing a purchase contract. Some states do not allow real estate licensees to help the buyer complete the purchase contract.

References

• "Modern Real Estate Practice"; Fillmore Galaty, et al.; 2006