It is important to remember that the bank IS NOT a party to the contract. Lender approval is just one more contigency that must be removed prior to closing, just like the buyer needs his lender's approval to fund the loan...
So the seller should have executed the 1st buyer's contract and submitted it to the bank for approval. Any back-up offers should not be presented to the lender for approval unless the first primary contract has been terminated.

Remember- the seller (homeowner) has entered into a contract with the buyer to sell this property. He can not legally terminate that contract just because he received a higher offer after the first was accepted.

Having said all that....
Not all listing agents handle lender negotiations the same- you need to ask if the seller signed the first offer prior to submitting it and if your offer was submitted as well.

It is very common for the primary buyer to fall out in a short sale and the the 2nd or 3rd buyer in line very often ends up at the closing table so hang in there!

Kelly Walters
Short Sale Specialist
Greensboro, NC

In an email dated Aug. 5, 2009, Jean Hobbs of the North Carolina Real Estate Commission states that the Realtor representing the Seller must disclose all offers to the lender who is considering the short payoff of the loan. She references the opinion of Mariam Baer, Assistant Deputy Legal Counsel and Tom Miller, Special Deputy Attorney General, so this is a well reviewed opinion. In short, your "back up" offer has to be disclosed to the lender who is considering taking a short payment. The email states that this requirement that the Realtor disclose the other offers is not excused if the Seller refuses to sign the other offer and it is also not excused even if the lender states that they only want to consider one offer. This is a disclosure requirement, not a requirement that depends on the consideration of any party to the contract or the lender.

The fact that your offer is a back up offer allows the first offer to amend or improve their offer. In other words, back up offers cannot object to the amendment of the original offer signed by the seller. So, the fact that you may be the best now does not guarantee that you will stay that way. The Realtor for the seller cannnot disclose the terms of your offer to any other bidder unless they have your written consent (something that I believe has never happened in the 30 years I have been practicing). But, the original offer can hear that other offers are being presented and improve the terms of their offer.

This question illustrates why it is so important that Realtors be fully trained in an area where they practice. If they are doing short sales, they must be fully educated in short sales. The requirement in this area is clear, and there is no debate about what the agent must do, so that an agent who is not aware of the requirement can be subject to discipline by the Commission. One way to get educated is to come to the class I teach, Comprehensive Short Sale Seminar, that is approved by the North Carolina Real Estate Commission for four hours of continuing education credit. The next class is Tuesday, October 27. Any Realtor can find out more about that class, or any subsequent class, by going to http://www.TakeShortSaleClass.com as I typically teach the class once a month. I believe I am the only agent who actually does short sales daily who teaches a class for Continuing Education Credit in North Carolina. So, if you know a Realtor who wants to stay out of trouble, go to http://www.CreateAShortSale.com for an encyclopedia of information on short sales or tell them to take the class at http://www.TakeShortSaleClass.com

Good luck.
http://www.TeamForYOUrDreams.com

All the answers have been good, but remember, there is more to an offer than just a number. Terms are also important. If there's an offer close to yours that is all cash, it is a better offer.

Short sales are very unique in each transaction. I have had some banks require that the seller signs the Purchase Contract and others that say do not have the seller sign the Contract until after the bank has accepted the Short Sale offer. There just does not seem to be "hard rules" for short sales that are the same and evenly enforced in every transaction.

Because of this I would highly recommend speaking to your agent regarding how this particular bank works.
Short sales are very unpredictable and can be confusing to navigate, but do not hesitate to contact your agent. that is what they are there for; to help you through it! Maybe you could write a list of your questions down and then ask your agent to get all of the answers for ou from the sellers agent. This could make you feel much more comfortable with the transaction. It also would give you the added benefit of having concrete answers from those directly involved in your transaction.

Best of luck!

When I have negotiated with the lender for a short sale offer, the lender generally wants me to submit the highest offer. It depends how far along they are with the offer that they are considering. Another question is who is representing the first buyer? Is it the listing agent? If so, the agent wants his/her buyer to purchase the property so the agent will earn both sides of the commission.

Ask your agent to find out what is going on. Is it too late for all the buyers to submit their highest and best offer? That is in the interest of the seller, or lender in this case.

Good luck.

your realtor should be able to answer for you. The problem with short sales for one thing is they normally take a very long time so patience is a must. It depends on the lender.... and if they look at only one offer at a time, or the best of the bunch. I always tell buyers to put their best foot forward because banks have 1000's of these and will usually not come back and counter. I have had some that will look at only one..... whether the best or not until that offer is dead,. Others look at all and take the best based not only price, but TERMS. If you have con't., they sometimes go with a lower offer without such. Have your agent check and find out if they are looking at one or all..... and the time frame.

Dear Lknato,That is a question that your Realtor should answer for you.

Regards
Roger Kenney