What is a Short Sale Addendum to Purchase Agreement?

A short sale addendum to purchase agreement is a legal document that is used when a seller is unable to repay the full amount of the mortgage loan and must accept a discounted payoff from the lender in order to clear the debt. The addendum outlines the terms of the agreement between the buyer and the lender, such as the amount of the reduced payoff, the closing date and any other contingencies that must be met before the sale is finalized.

What Should be Included in a Short Sale Addendum?

A short sale addendum should include the following items:

• The reduced sale price that has been agreed upon between the buyer and the lender.
• The date on which the sale is expected to close.
• Any contingencies that must be met before the sale is finalized.
• The terms of the agreement between the buyer and the lender.

What are the Benefits of a Short Sale Addendum?

A short sale addendum can provide a number of benefits for both the buyer and the seller. For the seller, it allows them to avoid foreclosure, which can have a long-term negative impact on their credit score. For the buyer, it provides them with the opportunity to purchase a property at a lower price than it might otherwise be available for.

How to Draft a Short Sale Addendum?

When drafting a short sale addendum, it is important to be aware of the legal requirements that must be met in order to ensure the agreement is binding. It is also important to ensure that all parties involved are in agreement with the terms of the agreement. The following steps can help you draft a short sale addendum:

• Gather all the relevant documents and information, such as the purchase agreement, the appraisal report, and the mortgage loan documents.
• Negotiate with the lender to determine the amount of the reduced sale price.
• Draft the addendum to include all relevant information, such as the reduced sale price, the closing date, and any other contingencies that must be met.
• Have both parties sign the addendum and have it notarized.

Sample Short Sale Addendum

Sample 1

This Addendum to Purchase Agreement (this “Addendum”) is made and entered into this ____ day of ___________, 2023, (the “Effective Date”) by and among ____________________ (the “Buyer”) and ____________________ (the “Seller”) (collectively, the “Parties”).
WHEREAS, the Parties have entered into that certain Purchase Agreement dated ___________, 2023 (the “Agreement”) for the purchase and sale of the property located at ____________________ (the “Property”).
WHEREAS, the Seller has requested a short sale of the Property and the Buyer has agreed to the short sale of the Property.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. The purchase price set forth in Section 2 of the Agreement is hereby reduced to $____________________ (the “Reduced Purchase Price”).
2. The closing date set forth in Section 2 of the Agreement is hereby extended to ___________, 2023 (the “Extended Closing Date”).
3. The Seller shall deliver to the Buyer a Short Sale Addendum to the Agreement in the form attached hereto as Exhibit A.

Sample 2

This Addendum to Purchase Agreement (the “Addendum”) is made this ____ day of ___________, 2023, between ____________________ (the “Buyer”) and ____________________ (the “Seller”) (collectively the “Parties”).
WHEREAS, the Parties have entered into that certain Purchase Agreement dated ___________, 2023 (the “Agreement”) for the purchase and sale of the property located at ____________________ (the “Property”).
WHEREAS, the Seller has requested a short sale of the Property and the Buyer has agreed to the short sale of the Property.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. The purchase price set forth in Section 2 of the Agreement is hereby reduced to $____________________ (the “Reduced Purchase Price”).
2. The closing date set forth in Section 2 of the Agreement is hereby extended to ___________, 2023 (the “Extended Closing Date”).
3. The Seller shall deliver to the Buyer a Short Sale Addendum to the Agreement in the form attached hereto as Exhibit A.

Sample 3

This Addendum to Purchase Agreement (this “Addendum”) is made and entered into this ____ day of ___________, 2023, (the “Effective Date”) by and between ____________________ (the “Buyer”) and ____________________ (the “Seller”) (collectively, the “Parties”).
WHEREAS, the Parties have entered into that certain Purchase Agreement dated ___________, 2023 (the “Agreement”) for the purchase and sale of the property located at ____________________ (the “Property”).
WHEREAS, the Seller has requested a short sale of the Property and the Buyer has agreed to the short sale of the Property.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. The purchase price set forth in Section 2 of the Agreement is hereby reduced to $____________________ (the “Reduced Purchase Price”).
2. The closing date set forth in Section 2 of the Agreement is hereby extended to ___________, 2023 (the “Extended Closing Date”).
3. The Seller shall deliver to the Buyer a Short Sale Addendum to the Agreement in the form attached hereto as Exhibit A.