Home Buying in 80921>Question Details

Alexandra Wi…, Real Estate Pro in Colorado Springs, CO

Need advice on whether we have legal recourse in a short sale transaction as a buyer who's being played unfairly by the seller and his agent.

Asked by Alexandra Winters, Colorado Springs, CO Mon Jan 18, 2010

Made an offer on a short sale in Colorado Springs. Seller's agent submitted it to the bank and we all agreed that it was the first and only offer to be submitted for bank's consideration and that back-ups would be taken only if ours was rejected and we couldn't meet bank's demands. 3 weeks later, seller's agent says they have a "considerably higher" offer and we must come up significantly or our offer will be replaced by the new one. We feel this is completely unprofessional and sneaky, after we'd been given assurances our offer would be first. Do we have legal recourse? Can this seller and his agent do this or are they breaking a law?

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The other Agents have answered your question. Having a Buyer's Agent Experienced in Short Sales that would have explained to you all that can happen with Short Sales might have saved you a whole lot of problems. The Seller's Agent works for the Seller and will do everything possible for their Seller's best interest. The Buyer's Agent will do everything for the Buyer's best interest. Many times we explain the many things that can happen with Short Sales and the Buyer's decide to go ahead and move forward with their offer. That's fine and sometimes they get very good deals, other times the bank isn't willing to sell short and the Buyer's are back to square one. They're not particularly happy when this happens, but at least they understood from the beginning the chances they were taking. A year ago the whole short sale process wasn't so horrible, at least for the ones our Team did but 2009 has been a little more difficult with dealing with the banks. Just to give you an idea how many short sales are out there, I pulled up 79 homes priced under $150,000 in Aurora, out of 79 homes only 9 were not short sales, out of the 9, 5 were lender owned. Normal Sellers, Buyer's are really looking for homes that are in good condition, priced fair and truly for sale.

If you do get anywhere with this, please do repost and let us all know what happened.

Sandy Kinslow
The Kinslow Team
Coldwell Banker Residential Brokerage
1 vote Thank Flag Link Mon Jan 18, 2010
This is a legal Question and a lawyer must answer if you have any legal recourse. I will tell you that this is common in short sales and one reason that us buyers agents do not like working on them. In the months and months that you are waiting a "better" offer can come in and bump you out of position. Now you must raise your offer if you really want the home. I heard that only 12% of short sales close with the first offer. It is up to the seller to accept any offers and a higher priced offer will help get the short sale done and prevent the seller from foreclosing. Some agents and or banks will only take one offer and work with it. Some will collect many offers and keep bumping lower offers out of the lead position making a bidding war if you want the home. There is no guarantee that the bank will accept a short sale in the first place and the bank can counter back at even higher than the listing price.
Do not count on getting any short sale home you offer on.
Brian

Do you have it in writing that this is the only offer and you are "under contract".
1 vote Thank Flag Link Mon Jan 18, 2010
Of course, you're angry now. And, you have every right to be. Unfortunately, there is ZERO rhyme or reason when it comes to banks and short sales. Your offer may have been the first, and may have been accepted by the Seller, subject to bank approval of short sale. What this means is that the bank can reject the offer at any time, whether or not they have another offer that is better.

The only way that you're going to get resolution now is to hire an attorney and have him/her start legal proceedings. Now, this will get expensive, so be prepared. And there's limited chances that you'll get a resolution that will be acceptable to you.

Probably the best thing for you to do is accept what the Seller's Agent is telling you, and stick to your guns. Then, when they tell you that your offer has been rejected, make sure that you tell the Seller's Agent that you are requiring, in writing, the rejection and cancellation of contract. Then you wait and see if you get your rejection notice.

More than likely, the whole thing is on the up and up, and you can move on to the next home. But, if the bank (or Seller, or Seller's Agent) is playing games, you may get the home in the long run. Very doubtful, but possible. I would just plan to start looking again and see if you can't find a better home. And make sure you're using a Buyer's Agent. Good luck.
0 votes Thank Flag Link Mon Jan 18, 2010
Are you not using a Realtor? If you are, he/she should be able to address this. If not, well that is just one out of many many issues that the general consumer can run into when they initially expected everything to go relativly smooth.
Legal advice should only be given by an attorney, we as Real Estate Brokers and agents are instructed repeatedly to direct legal recourse questions to the proper authority on law.
Any Realtor that says otherwise should know better, it is instructed in every basic class and is even on purchase contracts, listing contracts and agency agreements. Tax questions are for CPA's for example, legal recourse and disputes can be handled to a point by a Broker if you have hired them in the first place, however if it accelerates to the possibility of litigation a Realtor is not able to take it any further.
A Realtor may have an opinion on it but if you have gone into this thing a sa lone wolf without representation by a licensed Real Estate Broker you are really on your own unless you pay an attorney for a consultation on this issue.
Web Reference: http://www.OwnGJ.com
0 votes Thank Flag Link Mon Jan 18, 2010
A couple questions and a couple answers: Did you give them earnest money to be in first position? Do you have other offers out too? Did listing agent change the status to "pending" or U/C on the mls? Did agent notify later offers of your offer and your status? Did you sign anything to prove you are in 1st position and others are backups(proof). Obviously the listing agent submitted all offers to the bank regardless of what you were told by your agent or the listing agent. Highest and best is typical with multiple offers.
Since it is a SS the control is with the bank. The protocol of how the banks received the offer(s) is the question. Legally the agent has to present all offers to the seller.
You need to get with your agent to clarify how this happened. As always, you should consult with your lawyer and tax experts.

Also, the bank timeframe is SLLLOOOWWW so don't expect anything to happen quickly.
Web Reference: http://www.housefitz.ocm
0 votes Thank Flag Link Mon Jan 18, 2010
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