Addendum's needed to do REO and Short Sales.

[JD Hawkins]

Long time RE investor but new at wholesaling. I am ready to start making offers on REO as well as Short Sales I will be using Double closings where I will do First the A-B closing with Transactional funds and will take the property in an LLC. I will them turn around and close with B-C by using my pre arranged Cash end buyer.
My question is how much disclosure should I add (explaining the double closings ETC) as addendum's in my Original Contract offer. At this point the only Contingency I have is "The deposit shall be the sole remedy in the event of buyer default" . The state of Alabama already has the 10 Business day inspection so I don't need to add it.
Would like to know what others are using as addendum's in both REO and Short Sales?

[J Scott]

First, I wouldn't necessarily expect the banks to accept that particular stipulation if it differs from the standard state contract (i.e., if the state contract calls for specific performance penalties).

Second, the fewer stipulations you include, the more likely the bank is to accept your offer.

For me, the only stips I ever include are that we have 3 days from binding agreement to turn over the earnest money and notice that the selling agent (my wife) is also the buyer.

On occasion, I've added a stip that says I reserve the right to switch to financing instead of a cash purchase if I so choose, but that there is no financing contingency and that I'll pay cash if for some reason my lender can't perform (I do this because I occasionally decide before closing to finance the purchase instead of paying cash). Most banks don't have a problem with this, though I've had to remove it a couple times (though I still did it).

That said, no buyer contingencies are what the bank likes to see...