1st Deal Is A Short Sale - Can You Help?
I've looked around the site and read my $millions worth of REI material, but I can't seem to find answers to 3 questions:
1)I have 3-4 different forms for a purchase contract; not sure what to use. What particular language needs to be in there for the bank?
2) If the offer in the contract is the amount I will pay to the bank, how does the seller get any cash at closing?
3) I have no idea what would be considered reasonable to offer. It is a townhome, in a charming gated complex but in a not-so-attractive neighborhood where the values are kind of flat. Needs $5k in repairs. Last appraisal (2 years ago) was $50k, balance is $40k. 
I can't seem to find answers to 3 questions:
1)I have 3-4 different forms for a purchase contract; not sure what to use. What particular language needs to be in there for the bank?
You could use a standard realtor contract, or any contract that is typical for your jurisdiction. Most mortgagees will instruct you in what restrictive language is required in listing and purchase contracts.
2) If the offer in the contract is the amount I will pay to the bank, how does the seller get any cash at closing?
Seller get zero proceeds in a short sale transaction.
3) I have no idea what would be considered reasonable to offer. It is a townhome, in a charming gated complex but in a not-so-attractive neighborhood where the values are kind of flat. Needs $5k in repairs. Last appraisal (2 years ago) was $50k, balance is $40k.
If there is about $10K in equity, perhaps this is not a candidate for short sale.
You must first determine the property's as-is, FMV that you can support and defend. Base your offer somewhere between what it's worth, what you are willing to pay, and what a prudent mortgagee would be willing to accept as payment in full for their mortgage.
OK; I'm still a little confused. I'm trying to get a little cash out of the deal for the seller to move. I saw your post:
" The indicated purchase price is what you are willing to pay for the property. The amount the Seller owes is immaterial to your agreement to purchase.
If the sale is subject to, and contingent upon mortgagee's short sale approval... include that language in your Agreement.
The total agreement between the Buyer and Seller should be articulated in your Contract for Sale. "
This seems to say that the contract can offer the seller a price higher than the short sale offer.
Olivetree,
A bank will not allow a homeowner to receive cash (rightfully so--why accept a discount so the homeowner gets cash?). Better to draw up a separate bill-of-sale and buy something from the homeowners to give them the cash (appliances, garden hoses, you name it). Or pay them for cleaning out the place after the move.
OK, I get it now. That earlier post by the shortsalepro confused me. (No doubt s/he is a pro; I'm just a little dense.) The bill of sale will be perfect because the seller is leaving a bunch of stuff.