My daughter and son-in-law made an offer on a short sale property in San Diego. Offered $625000. Owner thru

Asked by Anne Tower, San Diego, CA Sun Jul 27, 2008

selling agent accepted the offer, and asked them for a good faith deposit of $3000 to be put into escrow account. They were willing to do that. A few days later, the selling agent said they were going to keep the listing open to other offers, and not accept the deposit. For about 3 weeks, there were no other offers, and paperwork was sent to daughter with offer, etc. Then a few days after that someone else made a higher offer. The listing is still open. Is that legal, or should my daughter's offer have been declined before they could have accepted another offer?

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Real Estate…, , Escondido, CA
Wed Jul 30, 2008
I wounldn't recommend buy short-sale properties. Because it takes long enough for the seller or the bank to shop for a better offer. To buy REO is a good way to get good deals in today's real estate market.
Web Reference:  http://www.rebate4buyer.com
1 vote
Sylvia Barry,…, Agent, Marin, CA
Sun Jul 27, 2008
Hi Anne:

In CA, there is a short sale addendum, which your daughter's Realtor should have suggested your daughter to use and explained short process to her fully so she is not surprised by this.

In a short sale, a buyer can submit an offer to purchase the home, and the seller will usually accept - even if it is a lower offer. This is so that the seller can start negotiating with the lenders and hope for the lender to assign an negotiator to start talking to them.

It's like catch 22, if there is no offer, the lenders won't talk to them, if the lenders don't talk to them, it delays the short sale process and the time bomb of foreclosure continues to tick. .

So the sellers will accept the offer no matter what, send it in to be approved. In the mean time, if your daughter choose the correct box to click on the Short Sale Addendum, she will not open escrow and the time line on the contract does not start until the specific offer is approved by the lenders (a long, long wait).

In the mean time, yes, the sellers are free to accept other offer and often will accept one that's higher (better chance for lender approval) and they can bump you.

I would ask the listing agent to give your daughter a courtesy call if there are other offers so she can decide if she wants to increase her offer so she does not get bumped.

When the short sale is approved by the bank, then the normal procedure starts.

Sylvia
1 vote
Jackie, , Santo, TX
Sat Aug 2, 2008
Steering buyers away from short sales is short sighted. Yes it can take a little longer and is certainly more work for the agent, but they often represent the best deals out there. I don’t have a problem with my clients making a offer on a short sale, I make sure I let them know what to expect and what the time frames could be so they are informed and have realistic expectations.

Buying an REO sometimes gets you a great deal, but the trend seems to be recently that under market priced REOs in good condition go into bidding wars quickly and often the price ends up being over fair market value. In a short sale, that also can happen, but most of the time, you end up with a great deal and also get full disclosure of property condition and history, something you do not get with a REO.

What you need is an agent that will work for you and is not just looking for an easy paycheck

Jay Gedanken
Broker Associate
PineappleHut Realty
858-605-5839
jay@pineapplehut.com
Web Reference:  http://www.saveyoucash.com
0 votes
Ronda Dacus, Agent, Denton County, TX
Wed Jul 30, 2008
Hi Anne,

I just want to add a few more comments for your question. First, with short sale listings, sellers typically accept offers "subject to" the lender's approval, which usually equates to how much the lender is willing to lose; therefore, lenders usually require that the listing continue to stay active until terms are accepted. Often times there is a second mortgage held by another lender, and terms have to be negotiated between the note holders as well, and this is where the timeline can really draw out. A contract is not fully ratified until all parties are formally in agreement of the terms.

Second, you didn't mention if your daughter's deposit was returned, hopefully it was. In future offers, one way to prevent deposit funds from being held in escrow for a lengthy time waiting for lender approval is to include language in the offer that states the good faith deposit will be forwarded to escrow after the offer is accepted by the lender, if it's a short sale situation. Only then will the contract be ratified, the listing goes "pending" and you're on your way to closing. That way the deposit funds can continue to draw interest for you, or in this case your daughter.

I hope this helps. If you have other questions you can reach me directly at Ronda@RondaDodge.com
0 votes
Jackie, , Santo, TX
Mon Jul 28, 2008
Did the seller accept your daughter’s offer in writing subject to lender approval or just give you a verbal acceptance? If she has a written acceptance, it probably has to be declined by the bank if that is a condition of the sellers approval before they can accept another offer. If you have an agent representing you, they have a responsibility to explain to their client (you) the process and the contracts they are signing. The highest responsibility an agent or broker has is to their client. They have a fiduciary duty to their client.

When I write up an offer for a client for a property that is a short sale, I always make a point to make sure they understand what can happen between seller acceptance and lender acceptance. A seller may or may not send additional offers to the lender. It often depends on the listing agent. While some lenders in their short sale process do ask that any and all offers are sent to them, many do not and if the seller accepts an offer (subject to lender approval), they do not necessarily have to send them to the lender. Silvia is correct; the short sale addendum does allow a seller to keep a property on the market until the lender accepts an offer. The operative word in the addendum is “may”. They don’t “have” to accept additional offers

You never know what a lender is going to accept or not. As a general rule, they will accept an offer that nets to them no less than 80% of fair market value (not amount owed). Lenders right now are getting better at making the process faster, although it is incredibly slow too often. If your offer is reasonable for the property and the listing agent is competent at their job, it should be likely that you will get an acceptance from the lender. It takes a lot if persistence from the listing agent to keep things moving forward and I have had to call a lender 40+ times in a row to get through to a person I could talk to. They are so over worked that often they don’t return phone calls or emails.

If your daughter is currently working with an agent or broker on a deal, I can't advise her what to do with that offer. If they are not servicing her needs or she is unhappy with their service, she always has the option of working with another agent on other properties unless she has a written buyer/ broker agreement in place.

Jay Gedanken
Broker Associate
PineappleHut Realty
858-605-5839
0 votes
Dallas Texas, Agent, Dallas, TN
Sun Jul 27, 2008
Sorry to hear about all this if you dont have an exectued agreement signed by the seller/buyer then not much you can do. Short sales/foreclosures do have drama, I dont have the indications from your statements your daughter will obtain winning bid on this property. What does your agent say about this? Can have you "push issue" why wont the seller accept your offer? Many short sales are in bidding wars this could be the case. I am assuming your daughter has been approved for a loan, we decline offers that are not lender approved.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference:  http://www.lynn911.com
0 votes
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