Bank is submitting a second counter offer after the firs counter offer was accepted. Is this legal?

Asked by Vabuyer, Lorton, VA Mon Jun 28, 2010

I have accepted the bank counter offer for a short sale property. We were supposed to close 2 weeks ago and we were just waiting for the approval letter. The bank never reply back, apparently we were just waiting for the approval letter to go closing. Now the negotiator has informed our Realtor that the bank has submitted another counter offer after we accepted the first first offer. It makes no sense? Can they do that? Is this legal?

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Erik Weissko…, Agent, fairfax, VA
Tue Jun 29, 2010

Vicky answers the question very well. Bottom line with a short's not over until closing is complete! These things are a mess and anyone telling you differently is mistaken. Sure, many of them go to closing and some are smooth as silk..Others..a complete debacle. Lender coming back asking for more money..sometimes behind the scenes the negotiator blows the deal because the fees they charge (sometimes thousands of dollars) are not acceptable to the bank...etc. etc.

It is still somewhat of a new process and each bank/negotiator/agent handles it differently so no two deals are the same. I always leave my clients an out and tell them to expect nothing on the short sales..this way we continue to look, options are left open and if the short sale's a bonus.

Good luck to you!

Kind Regards,

Erik J. Weisskopf, ABR,CDPE,CRS,GRI
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Tish Thompson, Agent, Manassas, VA
Mon Jun 28, 2010
Read the bank addenda. If what you signed is written anything like what I'm used to seeing in the listings I've taken from banks, anything goes up until the day of closing.
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John Fitzger…, , Fairfax County, VA
Mon Jun 28, 2010
I think we should all bear in mind that the short sale process is really a sealed-bid form of auction. The real problem with the whole short sale process is that the lender, the "3rd party", is in total control and, yet, the lender is not a party to the contract of sale.

I have never personally seen either a short sale or a contract to buy a REO ( lender-owned )property succeed in going to closing with any type of contingency at all, except for an appraisal contingency, but that's just my experience. Have your experiences been any different?

We should all bear in mind that all these bank bailouts, financed with our tax dollars and borrowed money, left the same people who got us into this mess still in charge, and we should be forewarned as to what to expect in dealing with them. This month's VAR magazine, Commonwealth, has an article on page 10 on lender misbehavior in short sale situations, which I commend to you. It concerns second trust holders in cahoots with settlement agents trying to induce buyers to pay fees to the second trust holder that are not to be shown on the HUD-1 settlement statement.

To get to the approval letter issue, if the contract was contingent for a fixed period of time on getting a loan approval satisfactory to the seller, and the time for the satisfaction of the contingency had expired, then the contract might well have been voidable at the seller's option. I just hope that this response is clearer than mud; the whole short sale process to me is just about as transparent as that substance.
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Dan Chase, Home Buyer, Texas City, TX
Mon Jun 28, 2010
If you have a completed contract signed by all parties involved the contract is valid. If any party did not sign it is not.

Ask your real estate lawyer if this is legal or not. Why trust someone who has not seen the contract or knows all the details when we all could get it wrong?
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Cecilia Rome…, Agent, La Jolla, CA
Mon Jun 28, 2010
Yes I would believe it to be legal. Even though you and the seller accepted their first counter offer, the bank still can review that offer since they have the last word. Until you have an actual executed approval letter with all the terms on there, anything can be reviewed and modified.
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Sandy Leaf, Agent, CHANTILLY, VA
Mon Jun 28, 2010
Welcome to the world of Short Sells. So your offer was accepted, the bank was still taking back up offers. Sit down with your agent and read the contract you submitted, there are always back up offers on short sells. If the bank gets a better offer than yours, perhaps they will give the 1st Offer an opportunity to match the second offer. Talk to your agent and his broker.

Short sells are a mess, tons of paper work, and just when you think you have sold a short sell, the entire contract falls apart.

You might be better off just finding another short sell and walking away from this mess.

Good Luck, and try not to stress out over this, it happens all the time.
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Jim McCowan, Agent, Arlington, VA
Mon Jun 28, 2010
There's nothing illegal about it no matter how it seems. Even if you have signatures from the first counter, the bank can try something else becasue they know they hold all of the cards.. You have three options: 1) Accept the second counter 2) Counter with the original counter 3) Walk away.
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Vicky Chrisn…, Agent, Purcellvile, VA
Mon Jun 28, 2010
I don't know about legal... and I don't trust most of the professional negotiators out there. Do you have copies of the banks offers? In other words, are you being told this or do you know it to be true because of the evidence you've seen. I have not seen a case where a bank changed the terms after all parties agreed. Maybe it is a counter from a second bank? Are there 2 banks (or 2 loans) involved?
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