Potential Short Sale Issues in Denver

I just learned something interesting regarding short sales in the Denver real estate market.

Let me give you the story;

I found a home for my buyers the first week in December 2008 in Castle Rock. It was a short sale. I proceeded to explain to my clients the potential problems, roadblocks and/or issues surrounding short sales in Denver. For example; it might take 6 months for us to get an answer from the short sale bank, these homes usually come as-is and a bunch of others reasons. After understanding the potential problems they decided to push forward with the offer. Well, to make a long story short, our offer got accepted the very next day WITH SHORT SALE APPROVAL.

We proceeded through the purchase process and get 3 days before closing. My client flies into town preparing to move in and I get a call from the title company telling me the short sale has not been approved. Not been approved?!?!?! We have already gone through Appraisal, inspection, 2 two-way airline tickets, the entire loan process let alone 18 or so contract deadlines and now I’m being told we don’t have approval when I have it (meaning the written approval) right in my hand.
Here is the moral of the story;

Even after the bank has agreed on a price for the short sale, and I mean agreed in writing, they are not obligated to sell the home until they have officially signed off on the final HUD. I have spoken to a half dozen Colorado Real Estate Attorneys in the past few days and the truth is…..Until your buyer has the keys in their hand, there are zero guarantees when dealing with a short sale property! They are not liable for ANYTHING until their signature is on that piece of paper at the closing table.

Forget contracts, they’re apparently worthless anyway….let’s just shake hands and call it a day!
I’m sure you don’t believe me. Check with your attorney and let me know. I am itching to get some comments on other’s opinions.