Short Sale Inspection Period

by Evette Cecena, the Queen of HUD on November 28, 2010

When working with an agent on a short sale be aware of when the inspection period begins. It has been a debate amongst real estate professionals that could cause problems for you. Generally, an inspection period begins when the seller and buyer sign off on a purchase contract. The AAR short sale addendum states that contract acceptance occurs when the seller notifies buyer that seller and lender have come to an agreement on short sale terms.

“If Seller and Seller’s creditors enter into a short sale agreement, the Seller shall immediately deliver notice to Buyer.”

Some agents argue that notice is anything in writing, which is consistent with the AAR Purchase Contract. Other agents argue that without the short sale approval letter, there is insufficient notice, and inspection period cannot begin. When a buyers agent is notified of acceptance they should advise the buyer to pursue the inspection because it has actually begun. It is imperative to obtain a copy of the approval letter, but you shouldn’t wait until you receive it to begin the inspection period. It won’t protect you in the end as a buyer. The seller could have given you notice of acceptance a week before getting you a copy of the approval letter.. now you are 7 days into your inspection!

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