In a Short Sale, is it customary for the P&S Agreement to go to the lender without the seller's signature?

Asked by Susan, Nashua, NH Tue Mar 17, 2009

My daughter has made an offer and signed a Purchase and Sales Agreement for a condo in NH. Her agent has informed her that the offer has been sent to the lender (without the sellers signature). The agent stated that the seller did not have to approve the offer, as the lender is the ultimate decision maker. I am worried that since the seller has not signed the agreement that the seller would still have the right to entertain other offers & is not legally bound or committed to her offer & this sale's process. Also, the agent who is representing my daugher (the buyer) is in the same real estate office as the seller's agent and I am worried that they may be trying to keep the process open for other offers. I, also, am not seeing any sale pending notice being listed on this listing, is this normal? Should my daughter insist that the seller sign the agreement in order to ensure that the seller is legally committed to proceeding with this offer agreement?
Thank you

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Bob Georgiou, Agent, Danville, CA
Tue Mar 17, 2009
The owner still has title to the property so (At least in CA) the answer is yes. The seller does have to agree to the contract since htye are still title holders to the property. Once the buyer and seller reach accord, then the bank has to approve the transaction based on the agreed upon net proceeds to them.

You should demand the signature so you have some control by way of the contract over the property Without it I personally fail to see how a bank could approve anything without an agreement between the buyer and seller. In addition there is too much risk of mischief.

For example, without the seller's signature the listing agent can continue to market the property as available and not as a pending sale. In our area in a short sales once the terms are agreed can be marketed as "pending subject to lender approval" which is still pending.

Another example is lenders want the last dollar. The best way to get the last dollar is multiple offers. Ask yourself if you want that. The risk of course is that the seller finds a better offer AFTER you spend cash on appraisal, home inspection, etc. You have NO leverage without a signed contract!
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Peggy Carter, Agent, Dover, NH
Tue Apr 7, 2009
No. The Seller is still the seller and not the bank. I have had all of my contracts signed by the seller. The seller will still accept all offers given to him. All offers should be written subject to third party approval. This means the contract is not binding and that is basically the best contract wins with the bank. In a short sale the bank must approve the offer. Nothing is being done incorrectly by the agent. They can not pend the P & S because it is not a contract. It is normally 90 days to get to closing. It is frustrating but if your offer is selected it usually is a great deal for the buyer.
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Scott Godzyk, Agent, Manchester, NH
Mon Mar 30, 2009
Good Afternoon Susan,

Yes the sellers need to sign the offer before sending it to the bank. Without their signature there is not a binding offer. The purchase and sales agreement must state that the sale is subject to third party or the subject to lenders approval. Just because the seller signs it does not mean it will be approved. The seller and their agent are obligated to send in any offers that come in after the original offer that may be higher or better terms, in that case they need to give notice to any other person with a pending offer that they should modify their offer to the highest and best offer. Often terms are just as important as price. The bank approving the short sale will want to see the house sold as is and will want to see the short sale contingincy in the contract. They like all inspections done prior to submitting the offer. I hope this can help.
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Tim Joyce, Agent, Nashua, NH
Sun Mar 22, 2009
Hi Susan,
I have had this issue come up many time in the recent months. The seller is the one that signs the offer as they are the legal owners, the offer should be “subject to 3rd party approval”. If multiple offers come in then they may request “final and best” offers, in some ways signed or not signed it is still contingent upon approval from a 3rd party.
If you are involved with a short sale, have patience and be prepared for 2 to 4 months and perhaps no approval after the wait.

Tell your daughter to continue looking and if she finds a great value somewhere else she can withdraw her offer on the short sale prior to approval. I am working on 4 short sales right now and they are frustrating for all involved. Usually they are a good value, however the process can test all involved. In my 24 years in real estate this is the most challenging market, however rates are great and there are some amazing values out there.
I work with a company out of Windham for my short sales, you may find some information on their web site to assist you in your journey.

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Dane Hahn, , 34223
Tue Mar 17, 2009
Hi Susan,

Your question in part asked, "In a Short Sale, is it customary for the P&S Agreement to go to the lender without the seller's signature?"

May I say every short sale is different, but like you I would want the "seller" to sign the document, (if only as an acknowledgement) which would indicate to the lender that the offer was acceptable at this level and now the "Third Party" would need to sign it as acceptable to them.

At issue here is who is the seller today? If the seller is the former resident, and the agent has a contractual agreement to sell the house with that individual, then the agent is representing him and should have no issue with getting his signature.

If the "seller" is the "bank" or leanding firm, AND the agent has an agreement with the bank to sell the house, then there is really no readon to have the former resident sign the document.

There are lots of unknowns here, and I would be investing in a lawyer. If your daughter wants the house, a lawyer would be short money to insure the process will not derail as each step is concluded.

Good Luck,

Dane Hahn
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