Someone screwed up here. I agree with almost everything that was said in this post. The reality is, regardless of what you did or didn't sign, the bank had to approve the short sale and it chose not to approve yours. The fact you did not sign an addendum may mean that the contract was breached by the seller, you may or may not have been damages and you will ahve to seek the consulatation of an attorney to exericise those rights and claim damages against the seller or the agent, if any. The fact remains the seller is representing that he's broke (hence the short sale) and if you knew it was a short sale your postion is diminished a bit. You still have rights though but you may ahve to exercise them through attorneys at this point. Is it worth the expense?
Legally, the bank is NOT the seller, and legally there can only be one Executed offer by buyer and seller at one time.
Yes, the bank wants the highest and best offer, but the ONE that's signed by all parties and CONFIRMED, is the ONE that gets to negotiate with the bank unless the bank has flat out issued a rejection of the offer.
If the bank will not approve the terms of that seller accepted offer, then it is not an approved short sale and the contract is cancelled by Buyer and Seller in writing.
Remember the lender / bank is only approving the acceptance of an amount less than what is owed in order to release the lien and transfer title.
Broker / REALTOR
When I work with buyers and we are submitting offers on short sales I stipulate REAl clearly in the purchase agreement , that seller is not to submit any competing offers to the bank if they accept our offer.. Although seller retains the right to accept "BACK UP" offers.
If this was not stipulated in your agreement , the seller can and sadly at times will submit competing offers to the bank.
Best of luck to you!!!
Kawain Payne, Realtor
Only one executed contract should have been there.
Back up offers should not have been signed, nor sent to the short sale lender.
You got to find out if in your state a short sale addendum was required by law/realtor regulations.
The lack of the short sale addendum, if required in your state, but not executed, means that, unfortunately, your interests were not represented correctly. It's your agent's job to make sure all of the paperwork pertaining to your contract is done the right way. Your agent should have also spelled out in the contract/addendum that only your offer would be submitted while it's active. This was not done.
There is a lot of confusion around short sales - I've heard some listing agents telling me that because of the "3rd party approval" all contracts need to be sent in. This is a wrong practice, regardless of which offer is higher/better in terms.
You are making a very valid and important point here.
Best of luck with whatever course of action you decide to take (previously mentioned by other pros),
CDPE - Certified Distressed Property Expert
Beachfront Realty, Inc.
Yes we have the fully executed contract. We were not given the counter from the lender. Our offer was the first fully accepted contract, and was the best and higest at time of submission to the lender, and just waiting for lender approval. Yesterday, the listing agent advised our agent that the lender accepted other offer with a slightly higher than our offer. We wish that the listing agent as a courtersy to extend us an opportunity to raise our offer since we were the first buyer. And because of our offer, they were able to stop the preforeclosure.
In my opinion it is not advisable to do this, and therein lies the difference between one short sale listing agent to the next. All Realtors do not work short sales the same way.
The bank is sitting there saying: "Send us all offers", however, they will only work on 1 at a time.
It is up to the listing agent to KNOW to let all interested parties know, that only the best & highest (highest is not always the best choice) will be the 1 & only submitted to the bank for approval.
You should always have the Short Sale Addendum attached to your offer. There is a clause in the short sale addendum that states that the listing agent CAN keep submitting offers to the bank, but I like to cross out this clause & have my buyer initial it.
Please let me know if you need any further help,, email me directly as I won't respond to anymore postings on this thread.
It's not clear if you used the Listing Agent to represent you or if you had your own Buyer's Agent. No matter, you needed to have a Short Sale Addendum or language specifying it is subject to the lender's approval. To answer the question. There can only be one Buyer and Seller executed contract at any given time. Do you have a copy of the Fully Executed Contract? Were you given a counter from the Lender ? And, the opportunity to respond to it?
If, all of a sudden, you were told teh bank accepted another contract, I would be suspicious as to whether your offer / contract was ever submitted. I do a LOT of short sales. Only one contract signed by all parties is valid at any given time. If the Seller / Listing Agent are executing more than one contract simultaneously, it's illegal.
Will you get this property? probably not. Should you spend any more time on this one, no. do you want to be in escrow with a Seller or Listing Agent that operates this way? Absolutely not. Move on, get a REALTOR that will represent YOU and only YOU, find another property and move on.
Best of luck,
Broker / REALTOR
First, you should ALWAYS use a short sale addendum for both your protection and the protection of the seller. The listing agent needs an offer to begin the short-sale process. It depends on how each listing agent runs their short sales if they present all offers to the bank or just the first offer. Typically they will let your agent know if they ask. Your agent should have veified if you were the only offer in front of the bank. IF you are an FHA buyer there is a HUGE bias against FHA in the marketplace and if you in fact were up against a conventional buyer it is not unusual the bank would have chosen a conventional loan over an FHA loan. It is especially important to verify how the listing agent runs their short sales in this instance. You should always hedge on short sales and write offers on anything you are interested in until you have a fully accepted offer and are in escrow. You are at a disadvantage if you are putting all your eggs in one basket. You need an agent who is VERY experienced in this market and has encountered every scenario.
Get yourself a Buyer's Agent, tell them what you want and what you expect and move on. It does not cost you anything to be represented, it can only help.
Next time stipulate in your contract that only YOUR offer will be sent to bank. If they do not agree move on.
Without seeing the executed contracts, no seeing the listing agreement, not speaking with asset manager direct ,,, many "what if's" and etc
However working with short sales and foreclosures is entire different "ball game" than purchasing direct from a property owner.