i made an offer on a short sale property and was told that i am a back up offer, and the bank won't look at mine until the first offer is

Asked by Stasia, Marlton, NJ Mon Dec 5, 2011

declined. This doesn't make any sense to me. If the bank hasn't entered a contract with anyone else why can't I submit an offer that will be looked at at the same time? I am 99.9% sure my offer is better since it is a cash offer for the full listing price. I am just afraid that I will be overlooked and I don't want to wait in the corner to see 'if' the first offer falls through or is declined. How do I make sure my offer is presented?

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13
Mary Petti, Agent, Edison, NJ
Tue Dec 6, 2011
Stasia,

Buying a short sale is in some ways a lot like buying a "regular" sale. The first contract goes to both buyer and seller attorneys for attorney review. When out of attorney review, it is a binding contract between the buyer and the OWNER of the house, At this point the listing agent cannot have the seller sign your offer (that would be two contracts on one home), therefore he/she cannot submit your offer to the bank as there is already a binding contract with the first buyer.

Now whether or not the BANK agrees to the short sale price of the first contract is a separate issue altogether. The bank also has the option of counter-offering to the first buyer if they feel their offer price is too low.

If the first buyers decline to raise their offer price, they can then rescind their offer, is it voided, and your offer can be next in line AND you will know what the bank is looking for price wise. THEN you can even try to renegotiate your offer (you will have to re-write the offer anyway as it will probably be over 2 months old) if you offered more than what the banks minimum is.
1 vote
John Sacktig, Agent, New Jersey, NJ
Tue Dec 6, 2011
With a Short sale, the best bet is to send the first offer that comes in to the Bank and tell anyone else that they are the backup offer. As in your case.

Why? There is a TON of work that is to be done by the bank to arrive at the potential sale price of the house. The buyers paperwork needs to be in order, the seller's 20 -40 pages of paperwork needs to be in order, the BPO / Appraisal has to be ordered, once all the documents come back, the bank can evaluate the offer and give either accept the offer to give a number they will accept. Once this is done, if the current buyer does not want to be at the price the bank wants.. The number becomes the list price and any other offer should be presented. Your offer sent in now, would just stop / bog down the whole process.

Usually the first offer in is the offer until the bank says no. This is the main reason that the seller should just sign and send the first offer that comes in on the property. It will get you to the actual number.
1 vote
Corey Grushin, Agent, East Brunswick, NJ
Fri Apr 20, 2012
The owner is the one who makes the decision on who to enter into a contract with Stasia. Wish you luck on your attempted purchase.
0 votes
Mark McKenna, Agent, Marlton, NJ
Mon Mar 26, 2012
Most of the larger banks don't have a very business minded approach towards short sales. They are losing millions of dollars each month with there horrible systems and lack of decision making skills through all of the red taped world they are in. Sorry, no good explanation!
0 votes
That's a Good answer!
Flag Wed May 16, 2012
Kathleen Lor…, Agent, Baxter, MN
Wed Dec 7, 2011
The bank does not enter into the contract- the seller does and apparently has. You were late to the table- now you can either wait or leave.
Web Reference:  http://topbrainerdagent.com
0 votes
Jerry Barker, Agent, Atlantic City, NJ
Wed Dec 7, 2011
If they told you that yours is a back up offer than the bank already has a contract on a previous offer. It doesnt matter if yours is better, first come first serve.
Web Reference:  http://www.sjrates.com
0 votes
Andrea Alumm…, Agent, Hoboken, NJ
Tue Dec 6, 2011
Banks want the highest and the most comparable to it's current value. Let's say current offer is 200k, once BPO is ordered and BPO comes in at 310kpurchase bank will counter offer at 210k. If current buyer does not want to pay the 210k bank will decline short sale. If you ate willing to pay 210k you have a chance.

Ask your agent to do a cma on short sale, banks don't care if offer is cash. They want whatever value BPO gives them- nothing more nothing less.

If I was your agent, I would get 3 sold properties within six months, within a mile most comparable to short sale property -address ti determine if your offer is worth using as a backup.

Andrea Alummootil
201-406-8015
SHORTSALES4SALE@AOL.COM
0 votes
Jodi Schwarzl, Agent, Cherry Hill, NJ
Tue Dec 6, 2011
Hi Stasia,

I believe the other agents have more than answered the why your offer may not get submitted, I would like to address your last question about ensuring your offer was presented. Your Buyer Agent can request something signed and dated in writing from the seller that indicates they received your offer and do not want to and/or are not able to submit it to the bank at this time. This is something I've done as a Buyer's Agent whenever the buyer has a concern like this. You may want to ask your Buyer Agent to do the same for you.

Let me know if I can be of any further assistance.

Have a great day.

Jodi Schwarzl 856-857-2817

"Always At Your Side"
0 votes
Elisa Tosti, Agent, Los Angeles, CA
Mon Dec 5, 2011
Stacie there cannot be two contracts for one property . Being a back up offer only means that you could be considered after the 90 day wait period buyer #1 has. Should that fall through you could go under contract. My advise is to find another property.
ELISA Nicolaci 609 505-5001
0 votes
Larry Sarlo, Agent, North Wildwood, NJ
Mon Dec 5, 2011
The seller is in contract with the buyer. The bank has last say to whether they will accept that offer. The seller has a right to accept or reject any offers. Including yours. The problem exists once a contract is submitted to a bank there goes with it a specific package for that offer. Once the bank begins it decision process that process will take time to process. When the bank rejects or should i say if the bank rejects, then new offers can be entertained. Again it is totally up to the seller to accept your offer.

The you may ask why are back up offers accepted? Answer, Many buyers continue looking for other homes while waiting for a short sale decision. Sometimes buyers back out of their obligation which is generally a contingent contract anyway. Not advisable to do...legally! Hence a back up offer will be looked at... Other reasons could be dealing with deficiency, concessions, first buyer "low balled the offer", back up buyer may be better qualified. Again it is up to the seller not the agent or the bank at that point. there are a host of other reasons that could be cause a seller to accept a back up offer and submit it. the process starts all over again at that point. Making your offer better is good practice for buyer agents.

There is a process a bank could want to use; highest and best and will be advertised as such, but rarely used. Of course it is always understood while accepting offers accepting the highest and best would be entertained. But once a package is submitted, it is submitted and the process to accept by the bank has already begun.

If you don't want to wait, look for another property. Escrowed deposits on back up offers should be handled differently also.

If the bank does not accept the 1st offer yours should be then given, considering counters from the bank are not accepted.

If I can help you find short sales in Marlton or any other area in Burlington, Camden or Gloucester Counties let me know.

Search foreclosures and short sale here: http://www.larrysarlo.com/shortsales.aspx

Search the MLS on your phone by Text: In the subject line on your mobile phone- LSAR1 -to number 87778 ... hit send... A GPS feature for listings at your finger tips


Larry Sarlo
RE/MAX Preferred
609-868-1171 call / text / email 7 days
lsarlo@comcast.net
http://www.larrysarlo.com
http://www.NJStopForeclosureHelp.com
Web Reference:  http://www.larrysarlo.com
0 votes
Ruth Bonapace, , 07030
Mon Dec 5, 2011
The above answers are absolutely correct and their answers are valid for New Jersey. With a short sale the contract is with the property owner. The bank is not the seller.
Ruth Bonapace
Wells Fargo Mortgage
Ruth.bonapace@wellsfargo.com
0 votes
Lisa Jones, Agent, Mount Dora, FL
Mon Dec 5, 2011
First of all, I believe you are stating that there is a signed contract between the Buyer and Seller in front of the lender. In Florida, the listing then goes Pending or Active With Contract and back-up offers can be taken.
The bank should only look at one "contract" between a Buyer and Seller on a short sale at a time. Once the first contract has been cancelled, then and only then, will another "contract" be entertained by the lender.

This is the big difference between Bank Owned and Short Sales. Bank Owner go for highest and best, Short Sales are just like any other sale. You cannot have 2 signed contracts on one property between a Seller and 2 different Buyers. That can get you in big trouble.

Also, regardless that you have made a full price offer, the lender may want more than the list price. When I submit back-ups I submit through email so that I have a record of it being received. Then, I stay in cotact with the listing agent to stay on to top of the situation. All you need is an email confirmation from the listing agent that your offer is being held as a back-up and what place you are in if there are others.
0 votes
R. Eric Axel…, Agent, Cherry Hill, NJ
Mon Dec 5, 2011
Unfortunately, this is just the banks' process. They use a computerized submittal system and you can only submit one at a time.

Did you use a Realtor or a shortsale attorney to submit your offer?
Web Reference:  http://homefinder360.com
0 votes
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