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We put an offer on a house that is being sold as a short sale; it was accepted by the seller and also by their lender. After the lender approved the sales contract, we were informed by the listing agent that another, higher offer had come in (from someone who had previously made a lower offer, that we had countered). They are telling us that we will need to come in with a higher offer, if we still want to pursue this purchase. Is it ok for them to do this after we have a signed contract with the seller and acceptance letter from the lender??
They told us that other offers can be accepted up until the close of escrow! That just doesn’t seem right. Any insight on this is greatly appreciated.
Do you have a seller (the owners, not the bank) signed contract? If yes, then they cannot accept other offers. If they dispute it your agent should be on the phone with the Broker in Charge and if need be the RE Commission. Consult an attorney if you need to.
In my state, if all the involved parties sign the contract, it is a done deal. Was the approval verbal or written? Were the any contingencies or a kick-out clause? Was there an addendum to the offer to purchase contract? Any or all of these things, plus your state contract laws, could allow this situation to occur.
Without knowing more details, it sounds a little fishy to me! Also, I guess since you are asking the question on this forum that you do not have your own realtor.
If you don't have your own realtor, call your states real estate commission. It may be called by a different name, but it is the folks that issue the licenses to real estate agents. They may be able to help you out. Good luck!
Comeon guys. You are not being realistic. Either the OP comes up in price or they don't get the house.
These things are extra legal - You have a commitment from somebody to sell that which they can't deliver...and they told you so.
The OP could sue the seller for specific performance. But the seller can't perform and the buyer knows it. Might get damages...which likely guarantees the seller goes bankrupt. And who gonna pay all those legal bills.
What the RE community should do is refuse to handle any short sale. But the industry does not have the cajones to do that.
So we limp along with the occassional screwed client as a result.
Pay the price or walk away OP...it is not a winnable situation.
Did you read the whole story? The lender approved the sale. They CAN deliver and told the buyer they would!
Comeon...you know anything about lenders and shorts? What exactly did they put in writing? And where did they commit they would not change their mind. This is an insane ad hoc procedure. They can do whatever they want.
And you, as an agent, need to explain that clearly to a client before they bid on a short. And if you don't I think the client has an action against you if it blows up.
This is simple stuff guys...why is it we cannot get it straight?
Olecapt...I have a question that is a gray area for you. If the seller signed the agreement is it a contract?
If the answer is yes and it's contingent on bank approval, is it still a contract?
If you answered yes, and that contingency is bank approval that has already been given, then how can the seller take another offer?
If the seller has a done deal and they are getting 0 back at closing, why do they even care as long as they stay out of foreclosure?
That is the problem that everyone keeps missing. Can you contract with someone for something they can't deliver? Sure you can. But what do you do if they can't deliver. Well you sue them. And if, as is very likely in these cases, they have nothing? You have a big judgement that gets wiped out in the bankruptcy and a 20,000 legal bill. That does not get wiped out in the bankruptcy.
When in a situation where the seller has accepted an offer and forwarded it to the bank and a new offer appears what should the sellers agent and seller do with it? Why approve it and forward to the bank. And the next...and the next.
The lender has no meat in the deal. He ain't committed to anything. And he can and will committ and recommitt...it just ain't his problem. If it brings the lender more money he loves it.
On Friday I am going to show a client at least two properties that are in a contingent status. The contingency is short sale approval. If I top the existing offer I expect the selller to change to contingent sold to my client. And I will put a close time line on it. I let someone else do all the work and then try and steal the deal at the end. NOT MY PROBLEM..good for my client.
Practically the seller can continue accepting offers forever. Let the lender sort it out.
We put an offer on a house that is being sold as a short sale; it was accepted by the seller and also by their lender. After the lender approved the sales contract, we were informed by the listing agent that another, higher offer had come in (from someone who had previously made a lower offer, that we had countered). They are telling us that we will need to come in with a higher offer, if we still want to pursue this purchase. Is it ok for them to do this after we have a signed contract with the seller and acceptance letter from the lender??
They told us that other offers can be accepted up until the close of escrow! That just doesn’t seem right. Any insight on this is greatly appreciated.
Disclaimer: I am not a lawyer and nothing here should be construed as legal advice.
Your CONTRACT is NOT with the Seller's Lender. Your contract is with the SELLER. Therefore if the Seller wants to cancel the contract there had better be a clause somewhere in the paperwork you signed that ALLOWS the Seller to cancel the contract if a higher offer comes in. I'm assuming there is not.
I'm also assuming that your contract with the seller is CONTINGENT upon the lender's short sale approval. You say the lender has given that approval. I assume this means that the lender has made a COMMITMENT to the seller to accept a payoff in line with what your offer will net them. Therefore the seller cannot use the grounds that the lender is rejecting the deal, UNLESS the commitment made by the lender to the seller included language that allows the lender to cancel said commitment at their discretion.
So here are the scenarios under which the seller can cancel your contract (thus coercing you into raising the price):
A) Your contract with the Seller allows the Seller to cancel your contract if they receive another offer they like better. Highly unlikely.
B) The lender's approval of the short sale is subject to revocation at any time before the deal is completed. This is possible. You need to find out if this is the case. If so, and the lender revokes the approval, your contract with the seller is now null and void, because it was contingent upon lender approval which you no longer have.
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