Hello, Kim -

You are certainly correct as long as it's understood that the Buyer and the Seller are the only parties to the contract. The lender is NOT a party to the contract.

The following language is excerpted from the Short Sale Addendum (Source: The Florida Association of Realtors® website). Our firm requires that this addendum be attached to every offer for a property where the listing agent has disclosed that acceptance is subject to a third party's approval, with appropriate modifications should the third party not be a Lender, i.e., a personal representative, a probate court, etc.

"4. Acknowledgement by Buyer: Buyer acknowledges that the Lender is not a party to the Contract and therefore is not obligated to approve the Contract. Buyer further acknowledges that Seller and Broker are not liable for delays caused by Lender, failure of the Lender to approve the Contract, failure of the Lender to complete the Short Sale after approving the Contract or any costs and expenses (such as payments for loan applications, inspections, and appraisals) associated with the delays or Lender’s failure to approve the Contract or complete the Short Sale after approving the Contract."

Pat, isn't all this fascinating?

The bank has the final decision. Once a contract is fully executed by all parties it goes into pending status.

Ken, thanks for the clarification. It always amazes me how different things are in different locations and you are probably the best one to address the 'status' portion of the question. Our contracts are 'active-contingent' until the contingency is removed. We have an area that shows the contingency so agents know if they should bother checking on it. Even if a home is under contract pending a home inspection, things can still go south. In the crazy market times when we couldn't get a Va offer through, I'd write back up offers on houses my buyers wanted if they were under contract. 6 times it worked.

Our system used to take contracts that were contingent out of the main search results and place them in the secondary search results like pendings are. This changed a bit ago and now the active contingent will come up just like the actives do and it's our job to open up each listing to agent view and see if it's still available. This causes a lot of confusion with consumers since it will not show contingent in many of the more public search engines but does allow us to market our sellers property more just in case a contingency is not met. In my opinion, a house is not 'sold' until it is closed and recorded but it's up to my seller to let me know if they still want to continue to show or look at offers.

in regards to price, I had one seller recently that qualified for a program that required a certain loss percentage so any higher an offer would have knocked them back to square one.

Lori, we really liked your initial answer and would add to your response to Don that another reason a Seller would be concerned about the amount of an offer is that they may be subject to a deficiency judgement - a higher offer would reduce the deficiency.

Pat's original question appears to be asked in relation to Punta Gorda, our own little piece of paradise.

Here is an excerpt from our MLS' Rules:

"All listings with an executed contract must be changed to “pending” status within two business days, with the exception of Right of First Refusal. Properties with any other contingencies are not allowed to remain in active status. Pending status must be chosen and additional items may be selected under the Contract Status field. For example, if the sellers wish to solicit back up offers, this option is available under the Contract Status field."

MY (see below) interpretation: An executed contract is one that has been accepted by the Seller. The need for a third party (not necessarily a lender) is a contingency. These properties Pat is inquiring about should be marked pending. The listing agents are not complying with the above rule.

Additionally, the Short Sale Addenda (to both Listing Agreements and Purchase Offers, approved by the Florida Association of Realtors® and in use throughout the State) boilerplate specify that the property can continue to be marketed. (We usually include language in offers (on short sales) that attempts to preclude further marketing and no one has objected to or challenged it yet.)

Pat, I hope this clarifies things for you as to what you are encountering in OOLPOP.

DISCLAIMER: Karen is the current president of of the Punta Gorda-Port Charlotte-North Port Board of Realtors®. This response has been written by Ken and is not to be construed as sanctioned by the Board.

To be totally honest, we do 10 times the work on short sales, get beat up on our fee and usually the buyer walks after waiting too long for an answer form the bank. We will list a property and accept offers and most agents will take the highest or only offer if all he gets is one and get it to the bank as fast as possible. Then we wait months for hopefully a bank approval and of course we then hope the buyer is still there.

Every time you send an offer in, the clock starts all over at the bank for an answer. If we were paid in advance to just keep marketing and sending offers in, we would, but then none would ever actually close. Besides the market changes and you could miss it and have no offers or offers going down. Those banks that act quickly minimize losses.

We may work 6 month to GROSS a $1,000 commission. After expenses and splits, how much do you think that equates to per hour?


Kevin Cloutier
Keller Williams World Class Realty
239-246-6639

Thanks Don. In addition, if an owner has a first mortgage for $200k and a second for $50k, they are going to want the highest offer. If they get an offer for $220, they can pay off the first and may be able to have the second 'removed' from the home and pay it off like a normal signature loan, with a balance reduction from any left over money. this works we for people that took out a line of credit to pay for vacations, vehicles, etc., It is, in my opinion, the fair thing for a seller to do and for those that are worried about their credit score, security clearance, etc,. maybe something they want to consider.

However :) sometimes the highest isn't the best. Closing dates, buyer flexibility (the buyer stating they are willing to wait 3 months to close) allowable close and rent backs...so many factors.

Very good explanation from Lori.

Just to comment on your statement: "If I were the current owner or bank I would want as many offers as possible on the table to maximize the price & limit any loss":

It doesn't matter to the owner at all. On any short sale, the owner is not permitted to walk away with a penny. So let's say the seller owes $200,000. The first offer comes in at $100,000. A second offer (in your scenario) comes in at $150,000. And a third offer comes in at $195,000. In all three cases, the owner will get exactly zero. Now, the bank might well go with the highest offer to minimize its losses. But that's the bank's call.

If it's a short sale, it's likely that the seller has already accepted an offer, that offer is ratified and the contingency is that it's subject to third party approval. if the seller wants back up offers to be submitted and reviewed by the seller, then the listing agent will do that. It's not real estate agent decision, it's the seller and they can decide if they want to deal with another offer or not.

If it's bank owned, the bank may take offers endlessly or the bank may have a highest and best offer bidding period and select which home they then want to deal with. They then deal with that contract only unless it falls through, then they can go to the second best or resubmit a highest and best offer. it's not up to the agents how the acceptance of contracts goes - it's up to the owner. Even in a short sale situation, the seller still has a right to accept or reject offers. Not all short sales mean that the seller is coming up with the complete amount. some have firsts and seconds or may be short a certain amount so the offer they accept makes a big difference. Some are submitting paperwork to different programs such as the hap program and the terms have to have certain guidelines. There is a lot more to an offer than the price.