The seller is the one who chooses the best offer. This may not be determined solely by price. The realtor is guided by ethics to counsel the seller about which offer has the best chance of being accepted by the bank and concluding the transaction. The seller has to do its due diligence to find out if the value being offered is in line with market standards. Depending on the comparables in the area, $15,000 over asking may not appraise when it comes down to brass tacks. These are unknowns. One thing you might do John, assuming that you still haven't purchased a home, is to have your realtor submit your offer with a PAA. There is a clause in there that can contractually put you in a back-up position. Then, if the first buyer falls out for some reason, you are in first back up position and essentially should get first right of refusal. With short sales going on for months ( I have one that is 9 months old), buyers are walking away and many back-up buyers are falling into first position. Best of Luck!

Lots of good input here already. The answer is yes and the answer is no. The listing agent represents the seller (not the bank). A listing agent would only represent the bank in an REO (foreclosure) sale. It would be appropriate and most ethical to submit the highest and best offer, but this is a situtation that may be entirely out of your control. The listing agent submits the offers and does the negotiations in most cases. So, this one may be out of your hands.

Hang in there, however. Many buyers do not end up waiting it out on these short sales and walk away. The person who waits the longest usually wins!

My point is that the offer is not between buyer and lender. It is between the buyer and the owner. The bank has no say over what the owner can do with his/her home. Not until the bank initiates the foreclosure process.

The offer is first accepted by the owner as he still owns the home. At this point the owner doesn't have to accept ANY offer and choose to foreclose. So there is nothing wrong in presenting a "scenario" to the bank to see what they'll accept.

From John's post, I'm gathering that only the first offer will be fully executed (accepted by both buyer and seller) and sent on to the lender. And that his offer has not been fully executed as the seller wants to progress with the first offer.

Ryan, I'm not an attorney, but I'm sure that in Florida a home owner can only sell their home to one buyer. California may be different. The buyer offer the homeowner chooses is the contract they sign and submit to the bank. This is the executed contract. Some brokerages may choose a different method which does not utilize executed contracts. The secondary and backup contracts are not submitted to the bank until the executed contract fails to be performed. As you stated, the homeowner still owns the home. When you are in possession of two significantly different offers and the offer of significantly less value is submitted to the bank, DEPRIVING THE BANK of the opportunity to minimize their loss, one has created for themselves a situation in which they have true risk. You would be right to observe this is done quite frequently, deliberately by speculators, unknowingly by others. Those involved in these transactions in Florida are confident the bank can not find out, or they are depending on the good and gracious nature of the bank to ignore the infraction. What I would be interested in seeing is when the bank chooses to make an example...how far up and down the food chain will they go. I am also confident that in the wild, wild west of short sales most will choose the path to the most expedient closing. Isn't expediency how we got into this mess in the first place?
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If John's offer to purchase was in the homeowners possession at the same time as the offer of significantly less value, and there are no materially beneficial terms or conditions, his offer should have been the one submitted. An amusing exercise would be to image who best should go to jail if we removed the bank from the equation and there was only the homeowner being presented only with the offer of less value.
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John, be patient and prepare to act should the other offer fail to execute.

Hi John, My guess is that if you were willing to pay 30,000 more then the bank will recognize that the offer they have in hand from the other buyer is not the best they can get and will counter the Borrower to come up with a better offer of sometimes ask the borrower to kick in some of their own money in a promissory note. You probably wouldnt be surprised to learn how little a Seller will feel committed to one buyer over another when they themselves have to come up with some money. They will likely ask their Realtor to find out if your offer is still out there, in order to avoid coming up with any money for a house they are loosing. Does this make sense?

I would suggest that you make your offer available and have your agent, if you are willing, tell the Listing Agent that your offer stands until you get into escrow on another property. This is often very effective. You dont want to pester or get angry because the homeowner/borrower is still the person in control, as you have seen, but if they need you, and they know that you have left the door open, sometimes they come looking for your offer because it probably will serve them best in the long run.

In the meantime, keep looking at everything you can, there will be something out there for you. Even if your offer was accepted by the Selelr, I would recommend that you look at other property until you have written approval of the short pay from the Sellers lender(s). Actually, I would make it a condition of your contract that you could. With short pays it's always a 50/50 shot at best that it will get approved so, you want to keep your options open.

Good Luck!

In response to Annette:

I'm not sure how it would be considered bank fraud. In normal short pay scenarios, the seller still owns the house. When he/she gets into a little money trouble and can't afford to make payments anymore, he/she has a discussion with their lender. "Would you be willing to take a short pay? I have an offer for you... do you accept?" The bank has all the time in the world (usually 6 months!!!) to investigate comps, appraisals, etc. and to say, Yes, No or here's a counter.

If the seller is still not able to afford their payments and doesn't present a strong enough "short pay" offer to the lender within a certain amount of time, the banks usually foreclose!

If I were representing the seller, I would make them accept every offer they get! They don't get anything from the sale anyway. AND they longer they procrastinate, the more susceptible they are to being foreclosed. (Which is a bigger "ding" on credit!).

In your case, John, it seems as the the seller is trying to save the home for a friend... unfortunately, there is no way to force the seller to accept your offer. However, he/she runs the risk of being foreclosed...

John, welcome to the wild, wild, west of real estate -Short Sales!
The bank, being expected to write-off or forgive, a significant deficiency expects to best offer to be presented to them. Failure to do so can be considered bank fraud. I am not an attorney, but the Florida real estate attorneys I consult advise to be alert for these situations. The new home owner is exposed to liability and a possible clouded title after the fact.
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Be alert also for homes for which the owner is unidentified or historic records are incomplete. In Florida this is a common tatic many 'speculators' use.
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As the buyer you have very little authority to influence the outcome of a short sale. Please consult a real estatate attorney in CA for the real scoop there. In Florida, the listing agent presents all offers to the home owner. The home owner decides which offer will be submitted to the bank, not the listing agent. On some occaisions, without knowledge of the listing agent, the owner has contacted the potential buyer to create a side cash deal! Short Sales....the potential for trouble is present, make sure you are well represented.

On short pays, the owner still owns the house and unfortunately, they have to accept the offers first. You are correct in stating that the listing agent has to present both offers. But in this case, he/she would be presenting both offers to the seller as that is whom he/she is representing, not the lender. Once the seller accepts the offer it is then presented to the lender for their approval (which could take up 6 months).

Hope this helps... good luck!