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Nancy, Home Buyer in Desert Hot Springs, CA

Is a short sale home owner legally allowed to accept more than one offer at a time for a short sale. ?

Asked by Nancy, Desert Hot Springs, CA Fri Nov 4, 2011

The seller signed and agreed to our offer and it was sent to the bank for approval. We then found out that after waiting for response from bank, the seller had accepted a higher offer and it was accepted by the bank. We were never informed that there was a second offer by the Seller's agent. He actually persued us to make an offer before his client left for a vacation. We were never told of the second offer and lead to believe our offer was the only one the bank was looking at. I think the seller and her agent are in breach of contract. This was in Desert Hot Springs California.

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Answers

9
Hi Nancy,
If you used the Short Sale Addendum form (SSA) when making your offer, please review paragraph #6. It states that unless agreed to in writing, the seller has the right to accept back up offers but should notify the buyer if another otffer is submitted to the bank.
Hope that helps,
2 votes Thank Flag Link Fri Nov 4, 2011
All offers need to be presented to the seller at any time. The Seller has to get the highest and best offer for the bank. SHorts sales can be a good deal but with that comes a lot more risk.
0 votes Thank Flag Link Tue Aug 25, 2015
Legal questions should be asked through an attorney we are not allowed to give legal advise .
HENA MARTI (BROKER)
0 votes Thank Flag Link Wed Jan 16, 2013
Definitely seek the advice of a real estate attorney because they were absolutely in violation of the terms of the contract that they had with you. It is a difficult process and unfortunately there are shady and unethical realtors out there and people don't know what to do to handle the situation. Talk to an attorney!
0 votes Thank Flag Link Sun Apr 22, 2012
A great way to stop this from happening is to be sure that the agent changes the status of the property from active to PENDING OR ACTIVE CONTINGENT in the case of a short sale. I am a Florida agent, but if a property is not showing active it helps to stop other offers coming in. The best advice I can give you is that nothing is guaranteed in a short sale or foreclosure. Repeat that to yourself 1,000 times before you buy one. They are not yours until they are closed.

Regards,

Eileen
Eileen Cline, Realtor
Experience that answers all YOUR questions.
ecline@advantarealty.com
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ecline.advantarealty.com
239-851-0451 cell phone
239-221-7034 office
866-291-6123 fax
0 votes Thank Flag Link Fri Mar 2, 2012
You should contact your attorney and see what he says about this matter. If you need a good attorney please contact me 415 871 6022.
0 votes Thank Flag Link Fri Mar 2, 2012
No. The seller can only sell the house once, signing only one contract. They can accept "backup offers," but those shouldn't be sent to the bank until and unless the original purchase agreement it terminated.
0 votes Thank Flag Link Fri Mar 2, 2012
This is a common mistake made by listing agents in a short sale. A short sale is still a regular sale between a seller and a buyer. The only difference is that the seller's agent will take the accepted offer to the lender and ask for a reduced payoff. But all the other contract rules still apply. Once your offer is accepted, the seller can only take back-up offers. They have obligated themselves to sell to you once they obtain lender approval of the short sale. If you have a signed and accepted offer that is the ONLY offer that can be presented to the lender for short sale approval. Only if your offer amount is turned down by the lender, and only if you won't agree to the higher price, can another offer be substituted.

I once spent a half hour arguing with the broker of a major Windermere office who insisted on agreeing with his agent that they were going to submit multiple signed offers to the lender and let the lender pick. Can you imagine the liability for a lender who made that decision for the owner of a property? What if they picked an offer that subsequently failed? Would the lender be responsible? You can see why logically the lender does not involve themselves in determining the best offer (they can barely decide on a sjhort sale, let alone one offer over another). One offer might be for a higher amount, but another might be for better terms. What would be best? A higher offer with 0 down financing, or a lower offer with a high down payment and conventional financing. IT JUST ISN'T UP TO THE LENDER TO DECIDE.

So, in your case, if you had a signed accepted offer and another offer with a later acceptance date was submitted instead, both the seller, the listing agent, and the listing broker are liable. They all violated the terms of your contract.

In my experience, if your offer was accepted and it pre-dated the higher offer, the parties involved are liable unless they can show that your offer was mutually canceled PRIOR to the seller signing the other offer. An attorney can subpoena a copy of the previous offer and request documentation. If you have your facts correct, you should expect a fat check from the listing brokerage's E & O Insurance.
0 votes Thank Flag Link Fri Mar 2, 2012
I would ask your agent to discuss the situation with his manager or broker in the office. Most offices have an attorney to consult with and so this is probably the place to start. Your agent and broker should review why there wasn't a form given to you about possible multiple offers, and you should have been informed whether all offers were submitted to the lender, or just the other one. When the deluge of short sales started a few years ago, there were many issues that needed to be sorted out about how to handle them. Perhaps this listing agent just isn't well versed in doing a short sale. Hopefully from this, you should get enough information to see if you should consult your own attorney. Best, Terry Bell, Realtor, Santa Rosa, CA
0 votes Thank Flag Link Sun Nov 6, 2011
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