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Scenario:
Florida Property is offered as a short sale for $100,000.
An offer is made and accepted (with short sale addendum) for $100,000.
Bank reviews short sale package and returns an approval amount of $125,000.
At this point is the Seller required to go back to the Buyer and let them know that the bank has approved $125,000? Is the Seller able to cancel the contract at this point?
What obligation does the Seller have to try to "work this out"?
What if there was a cash back-up offer at $125,000. Would the Seller be able to cancel the original offer with no penalties and accept the $125,000 offer?
I know you're probably going to ask what it specifically says in the contract, but what would TYPICALLY happen in this case?
The bank has the final say! It's short because the seller can't deliver it without bank's approval. Now, the seller can ask the buyer to up their offer or take other offers (that back up which happens to be in cash and exactly what the bank needs ).
Scenario:
Florida Property is offered as a short sale for $100,000.
An offer is made and accepted (with short sale addendum) for $100,000.
Bank reviews short sale package and returns an approval amount of $125,000.
At this point is the Seller required to go back to the Buyer and let them know that the bank has approved $125,000? Is the Seller able to cancel the contract at this point?
What obligation does the Seller have to try to "work this out"?
What if there was a cash back-up offer at $125,000. Would the Seller be able to cancel the original offer with no penalties and accept the $125,000 offer?
I know you're probably going to ask what it specifically says in the contract, but what would TYPICALLY happen in this case?
Thanks!
Did the seller submit your offer to the bank? If he did I don't think he has to do anything else. If he did it sounds like the bank rejected your offer and you just have to make another one. And the seller can accept or reject, and only if he accepts does he have to present to the bank.
Typically, the buyer would have the option to pay $125,000. If they choose not to, then the seller can't clear title. Clear title is a contingency in most contracts. Contract is done.
Then the backup offer comes into play once the first one is terminated. The seller has zero obligation to work out the first cheaper deal AND if they are in a deficiency state would be stupid to do so. It wouldn't be in their best interest. The less the deficiency is, the better it is for the seller.
At this point is the Seller required to go back to the Buyer and let them know that the bank has approved $125,000? Is the Seller able to cancel the contract at this point?
counter offer the banks approval amount on formal paperwork for the buyer to accept or reject, unless we had other offers that the bank was considering as well.
What obligation does the Seller have to try to "work this out"? the seller meaning the owner? none. if he can't "work it out", he can't work it out. house was for sale SUBJECT to the lienholders approval.
What if there was a cash back-up offer at $125,000. Would the Seller be able to cancel the original offer with no penalties and accept the $125,000 offer? If there are multiple offers on a property, we advise the seller to sign all and offer all to the bank. first offer of 100k was made SUBJECT to the leinholders approval, which did not happen. Offer/contract is now dead. Second (or backup) offer was made at 125k SUBJECT to leinholders approval as well, which was accepted. That contract is good and there is NO penalty to the first offerer. First offerer should have made a better offer.
I know you're probably going to ask what it specifically says in the contract, but what would TYPICALLY happen in this case?
Thanks!
alot of folks, mistakenly, believe because they offered first, that they have certain rights. Not necessarily true. and the banks want the house to sell for highest and best.
Here's the deal. My friend is in a situation where he and his wife accepted a short sale offer on one of their properties for $100K.
After they told one of their other friends (let's call him John) about the fact that they had accepted that $100K offer, John told them that had he known, he would have offered them up to $125k cash.
My friends would love to have actually sold the property to John instead of the other random buyer...
At this point, they are waiting for the lender to return its "verdict."
Of course they will honor their original contract if the lender comes in at $100K, but they are wondering if the bank comes back with a number that is even $1 more than what the original $100K contract, can they cancel the original contract and sell it to John instead? Or do they have to work it out with the original buyer first?
COMPLETELY agree with Silver. Right now, your friends NEED to sell. they need to bring in an offer that is close to, or better than market. Friends sometimes "say" things and don't exactly follow through with action. If friend is serious, tell your friends to tell him to call his agent (or theirs) and put in an offer. I don't even call it a back up. Our attorneys advise that ALL offers get accepted by the sellers and have all offers given to the bank. So the bank can pick the best offer to mitigate their losses.
IF your friends are feeling guilty, after friend makes his offer, RE Agent can go back to both and ask for highest and best offers..... that at least gives all parties the same opportunity. But really, that isn't required.
First though, is to see if said friend is really willing to put his money where his mouth is.....
Shelly
Last edited by shellytc; 11-14-2009 at 09:25 PM..
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