"if it is submitted, the attorneys office has to resubmit all the documents again for another person.. time = $ and guess what happens.......
the term "back-up offer" is used."
If this is the case, you should be aware once the contracts are signed by both buyer and seller you've got yourself a fully executed contract and the attorney review period starts counting time wait 3 days and you've got a solid contract or get it to the attorneys within that period to being attorney review and they can send letters back and forth and drag out the review process for a very long time.
Some attorneys will not complete the review process until they get approval from the bank but the good ones will end attorney review and wait for the banks approval as a contingency which must be met just the home inspection and mortgage contingency periods being contingencies. There are pluses and minuses to both approaches but I gotta run and show a house now so.... Later...
There is no "gave my word" to the buyer in a short sale, the seller "gave their word" to the bank that they would /could pay the mortgage. The bank is about to lose money and is trying to recoup as much as possible. .. hence the term: "short sale" = When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due.
Since it is about the money there is a time period that the bank can shut down an offer and accept another offer if it makes sense. Of course if the transaction is deep in the process and awaiting closing.. it probably will not happen.
As far as agents not understanding the process, I would never advise my clients to pass from making an offer on a property because of the listing agent experience or inexperience. I would be able to help that listing agent along the way to understand the process and get the offer through. Every transaction I am involved in, I monitor both sides of the transaction anyway.
Why would anyone want to inform the bank that a BACKUP offer is higher?
First you need to understand the short sale process, although a bank, lender or other 3rd parties approval may be required for the sale to continue, you must remember they are NOT the owner or the seller.
That being said, think of it in these terms...
Say I am the owner of a really nice car that I purchased using lender financing.
(I haven't paid it off yet however want to sell it now.)
I placed an ad, find a buyer and accepted their offer. Then you step into the picture answering the ad a little too late and want to make a higher offer but I don't want to accept it because I already gave my word I'd sell it to another buyer.
Now say you go to the finance company I got the loan from to purchase the car and try making a higher offer to them to buy MY car. What do you suppose will happen? This scenario is a perfect example to demonstrate your position in this transaction, except the car is really a house!
As to not rub anyone the wrong way let me further explain...
For your offer to be a backup, it would mean that another offer has already been accepted by the "seller" and went to attorney review and is now OUT of attorney review and then the offer is now just waiting for 3rd party approval which by the way is not always a bank. In any case the lender is not the owner, all offers DO NOT have to be presented to the bank because technically they don't own the house, so you'll need to deal with the seller.
(There are WAY too many so called "short sale experts" out there that are agent that did 1 or 2 of them or none but just took a class to learn what a short sale is or how to submit an offer. It's next to impossible to realize who really is a short sale expert or not but I'd have to say the proof is in the pudding. How many short sale deals have ya closed and out of how many you submitted?
Usually but not always it depends on the listing agent which is suppose to be the expert in the process. I have advised buyers to pass on properties where the listing agent didn't seem to be the sharpest pencil in the box on the topic of short sales due to the probability of them dropping the ball on the process and having the deal die or not get accepted. Short Sale agents need to be on top of their game and be pro-active vs re-active.)
Short sales can be a tedious process to get approved and even more difficult when buyers constantly back out because of the long wait for bank approval. If I was a home seller I would stick with the person I thought would have the best chance of getting a mortgage, seems to really want the house and will stick with the offer until the end which can be many months as opposed to someone wanting to make a higher offer that may back out a month down the road because they have second thoughts that their offer is too high and market value could have possibly dropped and no longer want to keep their offer on the table because now they think its too much.
The highest offer is not always the best.
I'm talikng logic here off the top of my head and not experience. But, if a current homeowner would owe the bank $30 vs. $50, why should he/she not want that "higher offer" not be submitted? Attonrneys can find a plehtora of ways to "kick" one out of a deal.
From what I am told regardng short sales, terms and conditions carry more weight than actual price. For example, one person an offer $100k, cash, 30 days to close, while another can offer $130 cash w/ no home inspection contingency.
I'm told that the most acceptable short sale deals are those where thare are NO CONTINGENCIES, no mortgage, no home inspection.
Short sales can sound good in terms of $$, but they do carrt complications.
Love ane Peace,
Fracncesca, Realtor, ePro
As I stated in another post, the attorney for the seller needs to be competent and concerned. It has been my experience that some seller attorneys just want to get the offer in and accepted.. and move on to the next deal, not concerned with people wanting to buy the house for more $.. if it is submitted, the attorneys office has to resubmit all the documents again for another person.. time = $ and guess what happens.......
the term "back-up offer" is used.
Sometimes the offer is acknowledged.. if it is hands down better, the people are qualified there is a chance the at it may be looked at and accepted if the process is not too deep.
I did have an experience where the attorney refused to send the contract after he held me off for three weeks and took another offer. ( I have suspicisions that he arranged a friend or family memeber to get the house) The other offer, I know was less then what I had.. he just stopped returning my calls and refuses to answer me.. him and his office. I am looking into how I can get this creep.
Anyway, it is not unheard of.. unlikely.. yes, but It can be done.