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I have one more question in reference to bidding on short sales. What is the time frame of when you can change your mind and get your earnest money back? Is it any different than when you bid on a property that is not involved in a short sale as far as the time frame? I know that it can take a long time for the bank to get back to you if they accepted the offer on short sales and there might be some point in time we decided to change our minds and just purchase a property that is not a short sale.
I have one more question in reference to bidding on short sales. What is the time frame of when you can change your mind and get your earnest money back? Is it any different than when you bid on a property that is not involved in a short sale as far as the time frame? I know that it can take a long time for the bank to get back to you if they accepted the offer on short sales and there might be some point in time we decided to change our minds and just purchase a property that is not a short sale.
Most short sales are 60-90 days for the time frame on ernest money deposits.They try to avoid having people put a deposit down then cancel shortly after because they found something else. You can still get your money back but you'll have it tied up for that time period. My contract is 90 days and we're now on day 201 . I like the house and haven't found anything else yet so I'm sticking it out a little longer. It frustrating to say the least but if it pans out it'll be worth the wait.
You need to look at what your contract says. In my state, we have an addendum for agents to use on short sales that specifically says that the buyer can change their mind at any point prior to bank approval, with no risk to their EM. You need to see if your contract says anything similar.
There is no standard time for holding earnest money, or when you can cancel. What is considered "typical" will vary by location. You should talk to a local agent to understand how it's usually handled in your area and in your contract.
For example, in Arizona, we have a short sale addendum that says earnest money will not be deposited until bank approval is received. You can cancel anytime until such approval is received. However, some sellers/agents modify this addendum to require at least a portion of the earnest money to be deposited immediately with a 60-90 lock in period before you can cancel (without losing the EM).
In all cases, this should be a negotiable item in the contract.
Another idea is to have your agent put it in the contract that you can cancel at anytime during your inspection period and get your earnest money back, which is usually in the first 10 business days(or two weeks) according to our contract here.
My contract, which is pretty much standard in the State of FL although I could have changed the terms.
Upon the seller accepting the offer money was to be escrowed.
The bank has 90 days to respond and accept/counter offer/turn down my offer otherwise I can get my escrow back. No response, I can get a refund of the escrowed $$.
I can also choose to extend the 90 days to 120.
If the inspection comes back with any significant repairs I can also walk.
My agent suggested I put $2,000 in escrow to make it look like a serious bid, personally I think $500 would have been fine.
You need to look at what your contract says. In my state, we have an addendum for agents to use on short sales that specifically says that the buyer can change their mind at any point prior to bank approval, with no risk to their EM. You need to see if your contract says anything similar.
This is exactly our case! We have not given ANY escrow money ($2k) until we get bank approval, so in the meantime, if we want another house, we have nothing to lose. Once the bank gives written approval and we decide to go another route AFTER giving our escrow, then we lose that money.
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. I like the house and haven't found anything else yet so I'm sticking it out a little longer. It frustrating to say the least but if it pans out it'll be worth the wait.
