There have been more questions than answers this week. Among other, people have asked: What do those zeroed out items mean in a contract and are you sure you can not take multiple offers on a short sale??? Since we do not have time enough to answer the first one lets talk about some more questions that I continue to get about Short sales. All of my customers and myself agree that the short sale is certainly not a short process and there continues to be so much confusion on how to handle them between the buyer and the seller.
I consulted our handy National Association of Realtors to get some valuable answers to some confusing questions so see if any of these help you out. In addition I talk on a weekly basis to my other Realtor buddies who are successfully handling short sales while following our rules and guidelines.
The question of multiple offers and how to handle them is probably my most asked question about short sales so I go right by what NAR tells us Realtors to do. Banks are not Realtors but we are so here is the ruling on multiple offers. The FAR Short Sale addendum that the buyer and seller signs states that, “. . . the seller may “accept” other offers and submit them to the lender.” Does the MLS status stay as “active” until the lender approves the short sale?
NO. If a purchase contract is signed by both parties, then the contract is complete and is now CONTINGENT on bank approval. The FAR addendum, and ones like it are designed to alert buyers under contract that the seller may continue to solicit offers and hold them in a BACK UP position, and may share them with the lender. The contract is still considered contingent, even though a listing agent may solicit additional offers and share them with the lender.
So what exactly does NAR say that we do with offers that come in after the seller has submitted an executed contract to the lender for approval?
Each contract is different. Unless instructed otherwise, the listing broker should present all offers to the seller for review. The seller can decide to hold the offer as a back up and present it to the lender. Of course the lender wants the highest possible price, however, once a purchase contract is signed by the seller and the buyer, that contract must be disposed of before another can be accepted and the lender approves it. The seller should refrain from signing more than one contract unless there is specific legal direction that the second offer is a back up offer.
It has been my experience especially in the last year that the back up offer serves a purpose and they many times end up being the customer who gets the deal. People get tired of waiting and sometimes their financial situation changes in the time that it takes to close the deal. So do not be discouraged if you are in a back up position you just may move to the front of the pack. Stay tuned next week for a few more confusing short sale issues. And as always thanks for visiting and listening. I would love to hear your experiences with short sales as a buyer, seller or Realtor.Print Story