Multiple offers on short sale

Can seller sign acceptance on more than one offer?  Bank tells me to have seller sign all offers before submitting to them for review.  I'm not sure that's a good idea for my seller.

 

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Permalink Reply by Wayne Brooks on January 21, 2013 at 10:06am
Definitely not. Look at all offers, talk to selling agents, and determine which one has best chance to close. Submit one signed Contract, no offers, to bank. Any "back ups" do not get submitted, until first contract is played all the way out and is completely dead.
Permalink Reply by Jeff Payne on January 21, 2013 at 11:26am

Jackie Merritt, take the short sale scenario out and then ask the same question.   The bank is not the seller..... 

Permalink Reply by Wendy Rulnick on January 21, 2013 at 1:46pm

Would you have your traditional seller sign multiple offers and make them each a signed contract?  Jackie, the seller is the owner of the house, not the short sale lender. Making multiple offers into "contracts" is a huge liability. Of course, you can use a kick-out/back-up clause for secondary offers, but those are only "back ups" that have no play until a primary contract is worked through.  It's not an auction. Kudos and yeah! - Jeff Payne and Wayne Brooks!

Permalink Reply by Jackie Merritt on January 21, 2013 at 2:41pm

That was thought exactly.  The lender however says "go ahead, because we have the ultimate power to accept or decline, but the seller must sign too".  One contract has been submitted, which was extremely low, and the lender has not acted on it yet. Now we have a full price offer in hand. My broker tells me the seller can rescind the first offer since the lender told me to continue showing and submitting offers. I'm feeling very unsure of all this.

Permalink Reply by Wendy Rulnick on January 21, 2013 at 3:00pm
Your Seller better consult an attorney before "rescinding" a contract. He may not be able to do that without a short sale decline letter. He would still have to get the buyer to sign a release and cancellation depending on your state law. I would not proceed without attorney advice to your seller.
Permalink Reply by Kathy Fuhriman on January 22, 2013 at 4:43am

Utah short sale contracts say that the buyer or seller may cancel contract at any time prior to third party approval. If your contract has similar verbiage your obligation is to get whichever deal to closing that 1) has the highest likelihood of getting closed, 2) is the best scenario for your seller.  Low ball offers have the lowest chance of getting to closing and, depending on the third parties, could make for the worst outcome for the seller.

Permalink Reply by Jackie Merritt on January 22, 2013 at 5:00am

Our short sale addendum is as follows: UNLESS OTHERWISE AGREED IN WRITING, SELLER MAY CONTINUE TO MARKET THE PROPERTY DESPITE ACCEPTANCE OF PURCHASER'S OFFER, AND MAY PRESENT TO THE CREDITOR(S) ANY ADDITIONAL OFFERS THAT ARE RECEIVED ON THE PROPERTY. Seller shall provide Purchaser with written notice of the receipt of any other offer(s) prior to or concurrently with the submission of such offer(s) to Seller's creditor(s).

- I just don't feel that really addresses the problem of the seller signing 2 contracts, which the lender says the seller must do prior to submitting. I have spoken with lender about needing a decline on the first offer prior to my seller signing the second. The first offer is extremely low..the second is full price. Guess we'll see how much money the lender wants.

Permalink Reply by Wayne Brooks on January 22, 2013 at 6:29am

I agree, that addendum is poorly thought out and just muddies the water.  That addendum does not allow the seller to accept another offer (make it a contract), only forward it to the bank.  Banks generally don't look at offers, only executed contracts.  Unless there is additional language, your seller does not have the right to recind the original contract, regardless of what the lender wants/instructs.  Unless you reach a time line in the contract which automatically cancels the contract, or allows a cancellation by the seller, or you get a decline by the lender, I don"t see a way for your seller to accept the second offer except as a back up.  But then again, you could explain the situation to the selling agent and see if their client would either raise the offer now, or agree to recind.

Permalink Reply by Kevin - Greenville, SC on February 1, 2013 at 8:27am

Follow State RE Laws as always.

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