In a “normal” or traditional real estate transaction, the binding agreement date is the date that all timelines (financing/appraisal period, due diligence period, etc) start from and are calculated by. With a short sale, we enter into a binding agreement with the seller (not the bank), but the contract is contingent on the seller’s lender approving the short sale. The contract is binding at the point, and all terms are set, unless the Seller’s Bank does not “Bless” the deal. The difference with a short sale contract in regard to the binding agreement date, as explained above, is that many of the timelines that normally start at the time of binding agreement are postponed until the time the buyer receives written short sale approval from the seller’s lender. Once written short sale approval is sent to your Buyer’s Agent, the clock starts ticking on all deadlines.
The reason for this is that it may take several weeks, even months sometimes, to get a written short sale approval from the Seller’s Lender. Buyers may not want to pay for an inspection or an appraisal before knowing that the short sale is approved since they will not get this money back in the event that the short sale is denied. Therefore, a stipulation is added to most contracts that specifically states, how the deadlines will be calculated, based off of the date the Buyer receives written short sale approval from the Seller’s Lender.