Home Buying in 85755>Question Details

Mike, Home Buyer in Tucson, AZ

What are the buyer's rights in a short-sale?

Asked by Mike, Tucson, AZ Sat Jul 17, 2010

I made an offer on a short sale. I was told through my agent that another prospective buyer also made an offer that was higher than mine. How can I find out if it is a real offer? Do I have a right to see other competing offers?

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Hi Mike,

The standard AAR Residential purchase contract that almost all Arizona Realtors use does not require the seller to disclose the existence of any other offers or any information related to any other offers prior to contract acceptance. Howerver, you and your agent may be using a different purchase contract offer form that affords you certain protections and rights. So, without knowing the full details of your forms and your contract, it is impossible to accurately answer your concerns.
So, if you did utilize the standard AAR contract forms with the boiler plate clauses, the seller is not obligated to prove to you that any other offers exists. However, you are entitled to receive an official, seller - signed/initialed rejection of your offer if it was not accepted by the seller.
You should be addressing these concerns to your current agent. You really need to trust the information that your agent gives you, but it sounds as though you don't . If you don't trust your agent, work together to create an environment of trust with him/her or find another agent that you can and will trust.

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PAUL WELDEN PLLC
HomeSmart
Exclusive Buyer's Agent
1 vote Thank Flag Link Sat Jul 17, 2010
The seller has no obligation to tell other buyers how much other offers were. The listing agent should never reveal this information because it could put their client at a disadvantage if the first offer falls through. The seller isn't obligated to accept any offer even if it is over the asking price. It is the seller's prerogative to accept whichever offer they would like. Actually, until an offer is accepted the seller can change their mind and take the house off the market and decide not to sell it if they want to. With a short sale, it is even more complicated. if the bank forecloses before the sale closes the homeowner (seller) is no longer legally able to sell so any accepted offer or executed contract to purchase would be invalid. Welcome to the wonderful world short sales. It can take a long time and there is a higher chance that the deal will fall through for some reason or another. Good luck!
Web Reference: http://teamlefebvre.net
1 vote Thank Flag Link Sat Jul 17, 2010
Dear Mike:
Good question. Short sales can be frustrating. However, there are gooo buys out there and they tend to be in better condition for the buyer than foreclosures.

In some cases the listing agent and seller advertises they are only taking one offer to the bank. However, the bank can ask to see more offers. The seller/bank can accept any offer they wish.

I am assuming your offer was not accepted by the bank, maybe just the seller?

The seller or bank do not have to diclose the details of other offers. If your offer is the best however, the bank is not going to want to accept an inferior offer. So, this tells you something.

In some short sales the bank accepts no offers, thinking they would be better and receive a better offer, if the seller was out of the property. Usually, the bank is better off with a seller still in the property taking care of it.

May I wish you the best. In this market, I am confident you will find a good deal.

Regards, Jeff

Jeff Masich, Realtor
Arizona Homes and Land
http://ArizonaHomesLand.com
HomeSmart Scottsdsale
0 votes Thank Flag Link Sat Jul 17, 2010
Buyer has fewer rights on a short sale then any other transaction. A short sale is more than a real estate transaction, it is allowing the mortgagor to get out under their debt with a short payoff to the bank. Offers submitted and approved by the bank still need to be approved by the bank. There are a number of hurtles that need to be jumbed before the deal can close. It is now all in the banks hands to see if they will let the transaction go to the next phase. It may go it may not, but with the short sale, the inital offer is only the start of the process.

Keith Manson
First Weber Group
Certified Distressed Proeprty Expert
Metro Milwaukee

http://www.milwaukeebailout.com
0 votes Thank Flag Link Sat Jul 17, 2010
When the seller accepts one offer, even if there are other ones, the bank will usually look at all of them on a short sale. They want multiple offers on a property so the price is higher. They might counter offer everyone, or accept one. Doesn't mean the deal will close. If there is a pending foreclosure date, this can be postponed a couple of times, but if the bank doesn't close on the short sale in time, it might just be foreclosed on. How many lenders are you dealing with on the seller side? This is important to know too. If this is the house you really want, go in with your highest and best offer. I would suggest still looking in the meantime at other homes. You might just gfind one that you like better that isn't a short sale, and can withdraw your short sale offer at any time before the bank responds.
0 votes Thank Flag Link Sat Jul 17, 2010
Good answers already.

Just let me add an entirely different comment to the mix:

It doesn't matter whether there's another offer, or what that offer (if it exists) might be. Doesn't matter at all.

What matters is what the house is worth. You make an offer equal to or less than the value of the home. Don't worry about other offers, real or fictitious.

If there aren't other offers, all the better. You have no competition.

If there are other offers, they'll either be higher or lower than yours. If they're lower than yours, fine. Yours is higher; yours is more likely to be accepted.

If those other offers are higher than yours, you probably won't get the house. So what? Did you want to overpay? Let's say the house is worth $300,000. You bid $290,000. Someone else bid $310,000. That's good for you. You didn't overpay. And the house may not appraise for $310,000. The contract may fall through and it'll be back on the market.

There are other techniques that your Realtor can tell you about to allow your offer to rise in response to competing offers. But it should only rise up to the value of the home--in our example above, $300,000. Not above. If someone else wants to overpay, let them.

Hope that helps.
0 votes Thank Flag Link Sat Jul 17, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Chris gave you some very good information on how it works. Even in this slower market if the home and price is right there can be several offers. It is very common.
Good luck
0 votes Thank Flag Link Sat Jul 17, 2010
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