I believe my colleagues have given some sensible and informative conclusions and alternatives to your situation. One thing no one on this forum most likely knows...is HOW the contract was written. If the verbiage is standard and without change or imagination and creativity then your scenario is one way. If the verbiage is a little creative and outside the box then you may or may not have another scenario.
With that said, be CERTAIN the other agent knows of your offer and the details and keep it in the back-up position. In doing so..you may also need to add some teeth to your offer by perhaps adjusting or modifying any or all of your contingencies.
If this truly is your dream house..you and your agent should be able to find a creative way to make it work. One way...is to buy out the previous offer and make them go away. This could be less expensive than escalating your offer...There is of course some inherent risk.. As always, it all depends on how much you want the home.
Best of luck!
Erik J. Weisskopf ABR,CDPE,CRS,GRI
Furthermore, if there is indeed some shenanigans going on..DROP THE HAMMER! You can go to the broker..but don't expect them to really discipline the agent..
I also agree with my colleagues in that you should continue to search as this could go on for months and you could still have nothing.
Best of luck,
Erik J. Weisskopf, ABR,CDPE,CRS,GRI
I am more than a bit worried about what the listing agent told you. I wonder if you understood the listing agent correctly. If so, what you say sounds as though there may be serious ethical questions regarding the listing of the home from Reatlor ethics, Virginia regulations, and multiple listing company regulations and points of view.
Please, please, make sure that, first of all, you protect yourself. Hire a buyer agent with some experience, read, and have your agent read, all documents that you are asked to sign, and do not hesitate not only to ask questions of your agent but also, if you are in the least doube after doing this, to ask to meet with your agent's broker.
If you are not working with a buyer agent, you need to be. This buyer agent should be familiar with the short sale process in general.
There is an ethical question in my mind with respect to both the Realtor code of ethics and Virginia real estate regulations as to whether or not a seller client of an agent ( in an agency relationship) may sign away his rights as a client to be presented with all offers, up to the time of closing. This is yet another good reason to have retained a buyer agent in writion, so that, if nothing else, you have access to a broker who can answer these questions.
Please also bear in mind that the controlling party is a short sale situation is the third party lender, and the lender required addendums ( which differ from lender to lender ) should be read with great care.
Please see my blog on buying short sales tha has some advice and tips
You might think you are the back up contract - you are NOT!
The SELLER must SIGN and ratify the back up contract for the contract to be ENFORCEABLE in the court.
What you have is an agreement (via e-mail, not verbal, I hope) with the listing agent who is either very ignorant or very nonchalant about the contract law.
Right now your "contract" is a waste of perfectly good paper and ink - and a lot of false hope.
Your agent should know better to demand from the listing agent that the contract is signed by the seller.
What makes you think that the listing agent does not have 2-3 "back up contracts" that he/she will pick and choose when the time comes?
Demand that your back up contract is ratified as such by the seller - with full understanding that there is already a primary contract that both sides hope will result in the settlement.
Better yet, move on to the next home where YOU are the primary contract.
And do that listing agent a favor and report him/her to the broker - or the local association and DPOR - that listing agent creates a very poor image for the entire real estate industry.
As McCowan stated the listing agent is ethically required to submit all offers to the seller. This can give the seller perspective on whether they want to sign an extension of their first contract or allow the contract to expire and send a new and improved contract to the bank.
If listing agent is unwilling to fulfill his/her fiduciary duties to seller of informing them of all offers, then your broker needs to contact the listing agent's broker.
I would just offer some alternative ideas - a similar home is likely to come on the market in the future (depending on your timeframe), or you could ask your agent to reverse market to similar homes to see if anyone else is considering selling.
I can only guess that maybe this is your dream home not only because of the house itself but because of the price. If that is the case, please keep in mind that many short sales are listed for low prices to encourage a quick offer so the short sale process can get under way. If it was priced low, the approval is likely to be higher than contract/list price. A lot of buyers back out at this point and if you are willing to pay more, you will get an opportunity.
BTW, in the standard short sale agreement forms, the seller can not push the buyer out of the contract after the expirarion of the short sale approval deadline, only the buyer can kick out at that point.
They have a ratified contract - both buyer and seller have signed the contract and agreed to exclusively work to make that deal go through. You can hope that the bank will come back asking for a higher sale price and that the first contract will be withdrawn. You can hope the buyer loses interest and uses one of their options to withdraw their offer. That happens often, and that's why the seller's agent took your back-up contract.
A very high percentage of short sale contracts fall through because of changes in what the bank will accept or because the buyer gets cold feet or finds another home they would prefer. So there's still hope for you, but it requires much patience. Your agent should keep in touch with the listing agent to stay aware of how things are going with the process, and continue to show you other properties.
Good luck, and hope you get your dream home, whether it's this one or another one.