Documentation of funds for making a purchase or a preapproval letter from a lender must accompany a buyer’s offer for a short sale, according to the Home and Garden Television. Sellers have three days to present the document to their lenders. Lenders have 10 business days to approve or reject a buyer’s offer, reports Bankrate.
Lenders must disclose a short sale as such while listing the property and notify the buyer about the involvement of the lender and seller in the negotiation, reports SFGate. Once a buyer makes an offer, settlement must occur within a reasonable duration to allow the existing homeowner to relocate. The lender should not require a close for at least 45 days, unless the seller is aware and consents to the arrangement, says Bankrate. The short sale agreement specifies a marketing period for the property during which the lender cannot foreclose the home, says the Home and Garden Television.
Buyers of a short sale are prohibited from reselling the home within 90 days following purchase, which eliminates speculative practices by buyers intending to sell the house at an inflated price for a quick profit, reports Bankrate. Short sales conducted under the Home Affordable Foreclosure Alternatives program discourage the purchase of the property from a friend, family member, personal acquaintance or business associate, according to the Home and Garden Television.