I agree with all of the answers so far. Another aspect to think about is seller motivations. If the seller gets a second offer that is equal or better that the first they may change the way they negotiate inspection, appraisal, etc items with buyer #1. Some seller will see the second offer as permission to get pushy with buyer #.

Also with short sales even if the status on the mls is 'pending' not 'pending BU' a sellers lender may require them to furnish copies of all offers, not just the one the seller accepted. This could put the seller in a tight spot it the accepted offer did not have wording allowing for this lender requirement. It could also cause the accepted offer problems if a better offer comes in after theirs. Sellers ahve little control over the lender in a short sale.

Rosalyn, the answer is, typically, no. The seller cannot voluntarily "drop out of the current offer."

Once buyer and seller are under contract, unless there are specific terms about backup offers, then they are going have to follow through on the agreement as written.

Pending BU is more generic than its use in Short Sale situations.

In the case of a short sale (for those who don't know what a short sale is: it's where the bank needs to agree to take less than it is owed) then Pending BU under the NWMLS rules means that the seller is presenting multiple offers - as they come in - to the bank and the highest net with the highest likelihood of closing will be selected *by the bank.*

It's also used in normal, non-distressed, sales where a seller is unsure as to the ability of a buyer to close. Sometimes, a seller will ask that a home be flagged that way "just because" they don't want to close the door to future buyers. Other times, a seller will receive information about a buyer's application that make them feel less than confident and hence they'll ask their agent to make that change to the status,

In any case, the home is officially "off the market" due to the fact that the seller and buyer are under contract with each other and while you can submit offers, the seller can't voluntarily remove themselves to go with your offer until the current one fails.

If the property is listed as Pending BU Requested, the negotiation should be complete. Seller is under contract to close on Pending BU Requested unless there was specific language written into the contract that seller could accept a better offer. All this means is that should the current buyer fail to perform to the terms of the contract and close on time, Seller wants to get a back-up offer in place from another buyer. If buyer 1 fails to close escrow under the terms of the contract, then seller can give notice to buyer one that he/she is accepting a standing offer from buyer two.

However, this would not necessarily be true if you wrote your offer "contingent" on the sale of another home.

"Pending BU" usually means the seller has a signed contract with buyer #1 and that contract is
contingent on financing approval, and/or an inspection, and perhaps a title review. As long as buyer #1 follows through on the contingencies and doesn't fail to obtain financing, or approve the inspection or title report, the seller is obligated to proceed to close the original deal. If the seller has a signed backup offer , and wanted to get out of the first deal, that seller could refuse to make any repairs that may come up in the inspection. The buyer #1 would then have the option to accept the home with no repairs and proceed to closing. In other words, the seller can't just "drop out" of the current offer , but the seller could try to make the deal less attractive for the first buyer.

Hi Rosalyn,

This is for a preforeclosure short sale situation. The seller has accepted an offer from the buyer but is waiting for the bank negotiator to approve or make the usual counteroffer. The bank, through their loss mitigation negotiator, is actually like a third party with all the rights of the seller. They can't drop you totally, but can counteroffer to a point where you would not want to proceed. This is provided you are using all the Standard NWMLS Forms for a short sale.

They may be sitting on another offer that is "stronger" then the current contract. Besides the fact that short sale transactions can take several months, competing with backup offers is another one of the potential drawbacks of buying a short sale home.

Any more questions than that you should contact an attorney.

Good luck, Gary
206-696-2329 gary@garymcninch.com