If a short sale contract is truly a contract between three entities -- buyer, seller and lender -- are all legitimate offers submitted to the lender

Asked by Majerle, Scottsdale, AZ Sun Apr 18, 2010

or can the seller accept one offer and reject any additional higher offers?

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12
Scott Godzyk, Agent, Manchester, NH
Sun Apr 18, 2010
The contract is between the buyer and the seller and contingent upon the thrird party, the sellers mortgage company approving it. Most lenders mandate that all offers be submitted as they come in, right up until the time they sign one. A short sale shoudl never be considered complete or accepted until the lender agrees to it in writing. All short sale offers should be accompanied with or at leats countered by teh seller with a short sale contingincy contract that states the sale is contingent upon approval by the lender and have all the contingincies and demands by the sellers lender in it.
Web Reference:  http://www.ScottSellsNH.com
1 vote
Pat & Steve…, Agent, Westlake, OH
Sun Apr 18, 2010
Majerle:

Following is my personal opinion of the contract law involved. If a Seller wants to consider a number of offers, he/she can submit them unsigned to the Lender first for Lender 's Approval of the best as determined the Lender. If a Seller accepts one of the offers by signing it before he/she sends the offer to the Lender, then he/she can only deal with the one offer.
1 vote
Tyler Truscio, Agent, Denver, CO
Mon Sep 23, 2013
The offer is agreed to between buyer and seller and then only that offer is submitted to the bank for bank approval.
0 votes
Laura Myers…, Agent, Scottsdale, AZ
Sat Dec 18, 2010
Majerle
The contract is between seller and buyer but is contingent on sellers lender approving the short sale and seller approving the terms set forth in that approval letter that is delivered. The seller will accept (should accept) the offer that is MOST LIKELY TO CLOSE so if the price is lower but the buyer is good to wait and qualified and informed then the seller is best to consider those factors as well as price. The seller is still in control. The bank does act as a bill collector though so things can and do feel controlled by the bank.
Good Luck
Laura Myers
Keller Williams AZ Realty
Select Realty Group
0 votes
Jon Griffith, Agent, Scottsdale, AZ
Wed Sep 22, 2010
@David, because the system is broken. The credit scoring system (or debt scoring system) isn't even agreed upon by the financial world...

...this topic just gets me fired up...BAH!
0 votes
David Rosen, Agent, New York, NY
Tue Sep 21, 2010
You can show the lender whatever offers you want BTW - its your house, you have rights.
0 votes
David Rosen, Agent, New York, NY
Tue Sep 21, 2010
A good litany of true and correct answers by all the agents....

BUT HERE IS A BETTER QUESTION: If a lender has to approve a short sale and another lender has to lend for a buyer to BUY a short sale - and in many cases the lender is Fannie Mae or Freddie Mac or FHA (50% are Feddie / Fannie, not sure what portion is FHA) AND the US Taxpayer OWNS all these entities -

Then WHY are HAFA deals routinely denied?
and WHY are there discrepancies in Appraised values of homes (maximum amount buyer's mortgagee will lend) and BPO price (minimum amount Short Sale Lender will accept) ?
0 votes
James Wehner, Agent, Scottsdale, AZ
Sat Sep 18, 2010
Majerle,

The short sale purchase contract is a contract between the buyer and seller with the contingency that the seller's lender approves the sale.

There are several ways that the short sale of the home can take place. The seller can review any offers and decide on the best one that they want to submit to the lender for approval and just work with that one. (Usually the best option)
The sellers can respond to the offers received with a multiple counter offer and submit all the offers for the lender to review. (Not a good idea!)
Or, the seller can respond to the offers with multiple counter offers and submit the one best offer to the lender for review, but never put the seller's final acceptance signature on the multiple counter offer of the one they submitted. This is usually done when the seller wants to allow the option to submit any future offers that may be better than the one they submitted to the lender. (This is usually not a good idea becuase it doesn't show any committment to the first buyer.)

I hope this clears some concerns.
Web Reference:  http://www.jameswehner.com
0 votes
Jon Griffith, Agent, Scottsdale, AZ
Wed Aug 25, 2010
A purchase contract is not between three entities, it is only between two, the buyer and the seller. Execution of the contract is dependent upon the seller's acceptance of the buyer's terms. In consideration of the acceptance, your agent should advise the seller in their best interest, which is to take into account the potential for the lender to not meet the contingency based on the buyer's offer.

There is a common misconception about who is a party to the transaction. The banks are simply stumbling blocks to closing, just like an inspection, or buyer's lender can be.

In fact, the lender doesn't even pay the fees. They simply take less at closing, and the seller pays the fees with the permission of the lien-holder with funds provided by the buyer or buyer's lender.
0 votes
Laura Myers…, Agent, Scottsdale, AZ
Sun Aug 8, 2010
Majerle
The seller is responsible for submitting an acceptable offer to the bank based on terms the seller agrees to then it is contingent on the sellers lender(s) approval. The seller and lender must agree to the terms of the short sale before the contract can fully move to closing. Up until that agreement is finalized the seller can decide to not short sale and the contract is voidable. All banks I have worked with want an executed contract and a seller can only agree to one at a time while subsequent offers would be held as back ups. Therefore only one is sent to the bank. If the lender instructs otherwise that can be dealt with but not typically the case. It is different if the home is already bank owned in which case they prefer several offers be collected then reviewed, then one is chosen.
To summarize the contract is between buyer and seller. It is contingent on lender approval and seller agreement to that approval. If all that is agreed upon the contract moves to escrow and buyer contingencies are then cleared then it can close and transfer.
Hope this helps.
All my best
Laura Myers
Select Realty Group
Keller Williams Arizona Realty
480-600-6213
http://www.DesertRidgeLifestyle.com
0 votes
Patrick Thies, Agent, Anytown, IL
Sun Apr 18, 2010
A short sale is not between the buyer and the bank, it is between the buyer and the seller. The bank does not negotiate the offer they only approve of disapprove the contract that the buyer and seller have agreed to.

The signed contract (not an offer at this point) is subject to bank approval ( a contingency to the contract). The seller is the one who accepts an offer. They can not accept more than one offer just like any other transaction.

If this was a traditional sale, any subsequent offers would be back up offers and subject to the terms of the real estate rules for that area. They would be presented as back up offers in the order they were received once the previous offer was refused or rejected. Same holds true with a short sale.

A seller in a short sale can not accept more than one offer at a time. A seller must accept an offer (making it a contract and subject to the terms of that contract) before sending it to the bank. The seller does not send offers to the bank.

FYI Its not always about being a higher offer. Sometimes it's the terms of the offer (closing date, cash etc.)
0 votes
April Crowder, Agent, Charlotte, NC
Sun Apr 18, 2010
Magerie, the contract is between two entities - buyer and seller - and contingent upon the lender's approval of the short sale. The seller has the right to determine which offer is sent to the bank for short sale approval and that may not always be the higher offer as sometimes lower offers that are cash or have more down payment are more appealing. However, once the offer is sent to the bank, no other offers are considered until that offer is countered to, or accepted or rejected. The bank prefers to work with only one offer at at time as it confused them to get several offers.
0 votes
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