The good news is that the purchase contract should state the facts. The bad news is the there are lenders that have sellers (and subsequently buyers) sign off on an addendum allowing lenders to continue to accept offers up to a few days before the close of escrow
Now here is a pleasant thought...there is an ongoing efforts by banks to take over the real estate business. Can you imagine the BANKS running the REAL ESTATE business?
There is lots of discussion as to what is legal / illegal, ethical / non-ethical. This stems from agents who frankly just don't understand the short sale process and don't have a lot of experience with them yet.
A great question to get your agent to ask the owner is: Is the property the owners Primary Residence or was it an investment property?
If it's their primary residence they will not get a 1099 at the end of the year & will most likely work with the first offer that comes in, provided it's not a ridiculous Low Ball offer.
If it's an investment property that owner is going to be more choosy with the offer they receive & if they can get away with it legally, they may submit another offer to the bank even though they accepted your offer first. They'll do this because they are trying to MINIMIZE the taxes they're going to owe at the end of the year with the 1099. (the difference between what the bank nets & what their loan balance was)
An owner CAN accept 1 offer "subject to bank approval' , then they CAN accept another offer (so long as the listing agent also has all parties sign a back up offer form) & then still submit that secondary offer to the bank. Once it's in the banks hands, the bank can then choose which offer they want to work with.
Maybe it's a Cash offer vs. a buyer who needs an FHA loan w/ only 3% down. Cash is going to look better.
Ultimately your agent should have included in your offer wording that stated "once seller accepts our offer subject to bank approval, seller may accept but may NOT submit any other offers to the bank until our offer has been first declined" (something to that effect)
There are so many factors with each unique short sale transaction & not enough rules yet for agents/owners and banks to follow.
If you have any questions you can email me at email@example.com
At this point the lender must approve the short sale. Yes, several offers may be submitted and the seller could sign multiple offers. I understand the confusion... however, the lender will only approve ONE submitted offer, of reject them all.
The listing agent is obligated to present all offers until escrow closes.
Why didn't you know the property was a "short sale" until after you made your offer. This is supposed to be stated in the mls. Because this was not clear, it makes sense that your agent neglected to add the "short sale addendum" to the contract which would have prevented your check from being cashed.
My question to the other agents, what recourse does the buyer have? It appears the listing agent was negiligent for not disclosing that the sale was a short sale or the buyer's agent was negligent in not adding the short sale addendum to the contract. What do you all think?
the deposit check for escrow has already been cashed and no where in the contract do we remember seeing the ability of the seller/agent to accept AND submit other offers to the short sale bank
is this possible?
if so and even if the other offer is a tad higher, do you think the short sale bank will look at the buyers "qualifications" meaning the the lower offer can be "stronger" ?
Unfortunately, possible and more predictable then we care to admit. The lender is looking for the best offer. If the agent has received a better offer, they will submit it. Until the lender responds with an approval, the offers can keep coming. Having escrow open does not dictate acceptance of the contract by the lender. Since you are dealing with the "loss mitigation" department, their intent is to mitigate the losses in whatever way they can.
Your contract with the seller is/was dependent on the lender accepting a short sale. Once your agent knew it was a short sale, a short sale addendum should have been added to the contract indicating the deposit check would be held from deposit until approval was received by the lender. Also in this short sale addendum, the contract action dates (contingencies, close of escrow etc) would not have started until lender approval was received.
Peter Solomon / Realtor
WG & Associates Real Estate