In the case of a short sale once the contract is signed can the seller's bank back out unexpectantly?
Considering a short-sale property. The property is well maintained and in great shape. We're making an offer at the asking price with 2.5% back towards closing. My realtor says it's a big risk that the selling bank can back out of the deal even as late as the closing table. My broker says this is very unlikely and once the contract is signed they're on the hook for it.
Who is "more right", and what risks do we run?
A risk that you run is the 2.5% back for closing. That could be a sticking point for the bank.
If the property is listed subject to the approval of the bank -- which has a security interest in the house, then, yes, the bank can back out. No real estate contract in NJ (where an agent prepares the contract) is binding on the parties until the contracts are signed and the Attorney Review Period is concluded. If the bank is handed a better offer than yours, they can accept it. Your broker is advising you correctly. Unlikely doesn't mean impossible.
Good luck with your purchase.
Joan Prout, MBA
Broker Associate
RE/MAX Villa REALTORS
Jersey City, NJ
mailto:Joan@JoanProut.com
800-671-0596x1
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