Short sale "Pending with release"

Asked by Mnoman, Santa Clara, CA Wed Dec 22, 2010

Can I make offer on short sale whose status is "Pending with release" ? Would seller agent consider that or would right away decline my offer?

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17
Tracey Martin, , Salinas, CA
Wed Dec 22, 2010
Considering other offers is a seller's decision and any additional offers they decide to accept, would be in back up position to the first accepted offer. Have your Realtor contact the listing agent to find out if they are accepting back up offers. If you don't have a Realtor, then you can contact the listing agent directly.

If the sellers are willing to accept your offer as a back up, your offer would remain with the selling agent until the first buyer walks or the offer is declined by the short sale lender/servicer. Short sale lenders/servicers generally don't want additional offers sent to them, because they can only work with one offer at a time.

If the sellers are willing, and you decide to write a back-up offer, you should make sure that language, giving you "an out" if you find another house, is included in the offer. There are Realtors who will write additional offers, on other properties, even after their client's offer has been accepted by a short seller. This could cause legal problems. Technically, once an offer is accepted by the seller, the buyer is legally obligated to stick with it until the date they have given on the short sale addendum has passed.

Short sales are a relatively new frontier for most Realtors and for a while there it was like the "wild wild west," where the rules were not clearly defined or understood. In the recent past, it wasn't unusual, but it was illegal, for buyers to have more than one accepted short sale offer out there.

Make sure you are protected and not locked into an offer that may sit in a file on the listing agent's desk for months, only to be tossed because the first offer was accepted by the short sale lender/servicer.
1 vote
Guy Berry, Agent, San Jose, CA
Wed Dec 22, 2010
What this means is that there is another offer already and probably pending subject to lender approval. it is a very smart strategy on a house you like to come in with a backup offer. If the first buyer goes away or the bank counters their offer and they don't accept, you will be right in line to step in their place. worth a try

Guy Berry
web: http://www.guyberry.com/expertwitness.asp
1 vote
Ruth and Per…, Agent, Los Gatos, CA
Fri Dec 24, 2010
Hi Mnoman:

Yes absolutely you can make an offer on a home with a status "Pending with Release".

Remember, a Bank (if only one lender) or Banks (if there is more than one loan on the home) in
more than 50% of the Offers in the last 90 days are asking Buyers to Pay more than the offered price.

Mnoman, so lets say you are in a back up position, and say the first Buyer backs out, then by default
your offer is selected next.

Also a lot depends if you are All Cash or need a loan.

Definitely ask your Realtor.

Happy Holidays.
Perry

http://www.ruthandperry.com
0 votes
Mitchell Pea…, Agent, San Jose, CA
Thu Dec 23, 2010
Monman:
Hang tight with your agent. Sounds like you might be heading in the right direction. It is up to the bank, seller, and seller's agent, so nothing is final till it's final, which for us real estate agents is after title has been recorded in the new buyer's name and the buyer or the buyer's tenant has moved into the the home.
Mitchell Pearce
408-639-0211
mitchell@hadnsonrealtor.com
0 votes
Roland Barcos, Agent, San Jose, CA
Thu Dec 23, 2010
Hi Mnoman,
First of all, it depends on what the contract and any attached addendums say. There are also some short sale disclosures that you should have been provided. If your agent can't explain these to you, then the proper place to seek advice is with a qualified real estate attorney.
Having said that, as you can see, we all have opinions and you can follow them at your own risk. As I said, it really depends on what the contract says. If it is a ratified contract (ie, signed and acknowledged by you and the seller), then it is binding and there is language that tells you what happens if either party breaks the contract.
On the other hand, if another offer comes in higher than yours, the listing agent and seller are obligated to present this to the bank, as the bank wants to see the highest and best offer. To withhold this information could put the seller and their agent in jeopardy of being accused of lender fraud, a federal crime.
As for worry, only you can assess your tolerance for stress. Be aware that short sales can take months and months depending which bank(s) are involved. Then any number of things can kill the deal, starting with the bank not accepting the short sale. If you are not comfortable with uncertainty and endless delays, perhaps short sales are not the right option for you.

Best of luck,
Roland
0 votes
David and Da…, Agent, Campbell, CA
Thu Dec 23, 2010
Hello too late short sale buyer,

Is the reason that you were so attracted to this short sale partly due to the low, low price? I have found that many new buyers see these supposed short sale deals and think they can really get the home at this price. Then when the property goes "Pending w/Release" the buyers think that they somehow missed out on some deal of a decade. Problem is that the listing agent listed the property too low in order to get an offer any offer to get their short sale started down the long road to bank acceptance.

Many banks won't look at a short sale or give any acceptable pricing guide to the listing agent without the seller and listing agent presenting an offer. Each Short Sale include the words "Price Must be Approved by Banks" for the reason that most are priced well below market value and when the bank sees the offer they most likely will counter for a higher price. The buyer can continue negotiations to get the price lower or as in many cases will simply walk away because the price they want is several thousands away from what they were thinking they could buy it for.

Now the listing agent and the owner will have an answer from the banks of what they might like to make for the property. Many times the buyer will back out and the unit will be re-listed to the MLS at the newer and higher price with the words "Bank Approved Short Sale". Be aware though that even though its "bank approved" every time the bank has a new offer on a property it will need a complete new approval.

I would recommend that if you want to be first in line when a short sale property falls out of contract be prepared to pay at least near market rate.... And Talk With Your Agent.

Sincerely,
Danielle Contreras
Real Estate Consultant
CA DRE #01753330
0 votes
Andrea Wince…, Agent, Milpitas, CA
Wed Dec 22, 2010
Many of the the short sales on the MLS that are pending will say in the private remarks (private as in only us Realtors see) "offer has been submitted for bank approval, additional offers will be considered". So the answer is yes, you can make an offer. It doesn't hurt to try, that is, if you really want that particular property. However, keep in mind that you could wait some time for an answer and there are so many properties available for sale, maybe it's best to go after one that's still active and not pending. Your choice. I would be happy to write and submit your offer, you may contact me through my Trulia profile. Kind regards.
0 votes
Felix Hung, Agent, Huntington Beach, CA
Wed Dec 22, 2010
Mnoman,

Your agent will know best. We are not privy to your offer or the documents that your agent sees. If you're nervous, ask your agent some more questions and have him/her talk with the listing agent to calm your nerves. It's a short sale though: it doesn't have to go through in the first place.

For my clients, I make sure that we're the primary offer and second we have an accepted offer signed off by the seller. When those two things are done, I feel pretty good now-a-days. BUT, I also have a heart to heart with the listing agent to figure out what their experience is with short sale and procedurally how they do them. Each listing agent does it slightly differently. Just like Michael Roberts mentioned, I know agents that submit each and all offers to the bank - but from my experience most do not. Most select the best offer and send that one in.
0 votes
Mnoman, Home Buyer, Santa Clara, CA
Wed Dec 22, 2010
Yeah selling agent sent us some addendum to sign and told that they have decided to work with our offer and sending it to bank.

I just want to make sure that I get first chance to receive the counter.

My buying agent is telling me that every thing is fine but I am really nervous :(
0 votes
Michael Robe…, Agent, San Ramon, CA
Wed Dec 22, 2010
Hi Mnoman, I would encourage you to submit an offer if the conditions are right. Pending with release means the other offer will have to meet your offer once it is submitted. Pending with Release is often misunderstood by the parties involved.

Pending with release leaves the initial buyer at risk of losing their1st position the minute an offer is submitted that is 'better' than the first offer. Influencing the listing agent to submit your offer can be tough though.

As mentioned earlier, it would be beneficial to have your agent make the proper inquiries on your behalf.

Michael
http://LosGatosHomesandRealEstateBlog.com
0 votes
Felix Hung, Agent, Huntington Beach, CA
Wed Dec 22, 2010
So your offer is the "pending" offer? And you have an accepted offer signed by the seller? If yes, they you should be the only offer that receives the counter. How does your agent feel about the listing agent? He/she will best be able to tell if the listing agent/negotiator knows what they're doing.
Web Reference:  http://www.felixhung.com
0 votes
Arn Cenedella, Agent, Greenville, SC
Wed Dec 22, 2010
If I was the sellers' agent, I would recommend that seller accept as a back up. Then I would send offer to bank. Ultimately, the bank will decide which offer they want to approve. Even though seller will receive no money from sale, it is still in seller interest to get highest offer possible as it will reduce any potential deficiency should lender decide to our sue seller for unpaid balance on loan.
0 votes
Mnoman, Home Buyer, Santa Clara, CA
Wed Dec 22, 2010
Thanks every one who answered.

Actually guys it was hypothetical question. I wrote an offer on house and it has gone "pending with release".

My agent did not add addendum for seller not to accept new offers but now telling me that I should not worry.

I want to protect this deal and want to make sure if bank offers counter, I am the first guy to know the counter price and decide if I can raise my bet or not. Any advice please ?
0 votes
Terri Vellios, Agent, Campbell, CA
Wed Dec 22, 2010
Mnoman, Guy gave you good advice. What is your agent telling you? It is always a good idea to discuss this with your agent that way they can open up a dialog with the listing agent.

Generally what happens, as Guy stated, is the seller accepted an offer and it is in the bank's hand pending approval. If the bank accepts then the first offer will move forward. If the bank counters then the current offer, the seller and agents see how they can make it work. With that said, putting in a offer you are vesting time writing an offer but if it is the property for you, you could be in the next position in the event the first buyer doesn't like waiting.

Good Luck.
Web Reference:  http://terrivellios.com
0 votes
CJ Brasiel, Agent, San Jose, CA
Wed Dec 22, 2010
M-

It is best to have your agent call and see the seller's stance on back up offers. In most cases you can submit a back up offer. Your agent will need to keep up with the accepted contract and make sure you are aware of how many back up offers are in, and if yours is the "best".

Good luck,
CJ
0 votes
Mnoman, Home Buyer, Santa Clara, CA
Wed Dec 22, 2010
So if the bank makes counter offer then will 1st buyer gets the chance to meet the counter offer or I will get the chance?
0 votes
Felix Hung, Agent, Huntington Beach, CA
Wed Dec 22, 2010
Mnoman,

You can always make an offer and the agent always has to present it to his/her seller. With that said, if it's a short sale that is in pending status, the likelihood of you going anywhere with that offer is low unless something happens to the current offer that is pending. Since I'm not the listing agent nor the seller, I can't say if they'll consider it or just decline it. BUT as I said, you can always submit something. Consult your REALTOR since he/she will have all the details.
Web Reference:  http://www.felixhung.com
0 votes
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