My husband and I recently made an offer to a seller of $315,000 on a house that was listed at a Short Sale price of $359,000. The sellers accepted our offer. It went to the bank for their approval/rejection. After about a month and a half, just last week, we were informed by our buyer agent that the listing agent informed her that the bank rejected our offer, because it was too low, and a significantly higher offer had come in. She stated that if we wanted to significantly increase our offer, we could.  Since we liked the house we increased the offer by $20,000. We received word back from our agent that same evening stating that the listing agent once again said our second offer was still not competitive with the other offer which was still significantly higher.

 

 With that said my husband and I decided not to make another offer, since we had no idea how significant the other offer could have been.  Our first offer was based on the Comparative Market Analysis for homes sold in that subdivision over the past 6 months.  The realtor we worked with thought that our offer was a good one and felt comfortable submitting it.

 

My questions is, since we did not make another offer after the second one, should we receive written notification from the bank or our agent notifying us that the contract is now null and void, or just the mere fact that the buyer agent told us that the bank did not accept the offer is sufficient.  

All comments are appreciated.

 

 

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Your offer not being accepted is enough. Was your Contract written subject to third party approval? If so since third party approval was not given then your contract was not fully ratified. However in order to receive your Ernest money deposit you will need a release from the seller of the property.

Yes, the contract was written subject to third party approval (the bank). My buyer agent sent me an e-mail stating that since we did not want to make a third offer, that she was going to stamp void on my check and drop it in the mail to me.  So, I assume the seller has released us from the property. Although, we were not told that specifically.

Thanks for your reply.

I have heard persons discuss that in many cases the bank countered their offer.  Although, we were not given this opportunity.  If the bank had done this, at least we would have had an idea of what price range they would accept.

Thanks. 

Juanita,

 

Two things came to mind when I read this:

1. Did you review the comps with your agent before you submitted your offer? The bank is going to look at solds in the past 6 months, +/- 10% square footage, in the same subdivision(or as close as possible). If the bank countered you twice significantly higher than your offer, and your offer was in line with the real value, then the listing agent who is negotiating the short sale is not communicating something about the house to the bank. Also, if this is the case, then when the bank did their apraisal it must have came in way high.(this happens often but can and should be overcome)

2. You said there was another, higher offer on the property. So am I correct to understand that the seller accepted two offers and send them to the bank? If so, that was a recipe for disaster. If not, they should have accepted your offer and given you a chance to counter with the bank or at least match the offer that the other buyers were making, since you had a contract on it first. Legally it just depends on how the contract was written and what state you are in.

 

 

 

 

In response to your first question, yes, I reviewed the comps with my agent before we submitted our offer. Yes, we also thought that the appraisal the bank did must have come in high. My husband and I thought it strange that we did not receive a counter, especially after our second offer.

 

In response to your second question, we were told by our agent that the listing agent informed her that there was a higher offer on the property, that's when we asked our agent to raise our offer by $20,000. After about 2 hours our agent called me back and said that the other offer was still significantly higher. That's when my husband said he felt that the bank had not received the 2nd offer and for me to tell my agent that we did not want to make a third offer; since we knew not how far our price was from the the person who made the significantly higher offer. We felt that we were at a disavantage. So as far, as the sellers accepting two offers, I cannot answer that, as we were not told anything else. My agent informed me by e-mail last week that she would  void my earnest check and  drop it in the mail to me.  My husband and I have decided to move on. I am in the state of NC.

 

Thanks again for your comments,

 

Juanita

Ya that is tough. Short sales can be frustrating when you are trying to buy one.. They can also be a huge oppertunity tho.

 

I would say in the future, if you are going to make an offer on a short sale, make sure that your agent writes in for you that if the buyer accepts your contract, they will not accept any other contracts except for as backups. And that you have the option to negotiate with the bank, without being effected by any backup offers. If they accept your offer, you SHOULD have the first right of refusal on any bank counters, and the seller SHOULD NOT submit any other offers to the bank until and unless your purchase contract falls off the table. That being said, often times the sellers accept multiple offers and submit them. It's the wrong way to do it, but there are a lot of agents out there that don't know how to get a short sale closed.

 

Anyways, glad you and your husband are moving on and putting it behind you. I hope my comments help you out moving forward. Keep in touch and let me know how it all ends up :)

Thanks Joshua, I will definitely keep in touch. Oh, by the way,  I did read the Short Sale Addendum again and it stated that if Lienholders reject the Short Sale, then either party may terminate the Contract by written notice to the other party. I assume my buyer agent has done this for me.  I have not heard from her in over a week. It also stated that additional offers could be accepted by the Seller as backup contracts and forwarded to Lienholders for review and approval. 

At this point, I never want to even hear the word "Short Sle" again. If so, I am going to take off running the other way. I just wished I had your information earlier, because I never heard of a short sale until about a couple of months ago.

 

Take Care.

Once an offer has been submitted to the Lender, the other offers that come in go to "back up" position.  The First position offer is the one that is countered..that would be yours from what it sounds like.  The List Agent would tell you what the bank has countered at and try to get an agreement between you and the Lender.  If it cannot be reached, then you are out and the back up offeree is contacted and if still around, moved into first position.  I do not submit multiple offers to the Lenders, though all offers are kept in my file and Sellers are notified of course..that's my story in California..

Well, we did not have that option of countering. We were just told that someone else submitted a significantly higher offer by my agent, and if we wanted we could increase ours. My husband and I increased ours by $20,000 and was told a couple of hours later by my agent that the list agent said that the offer still did not compete with the significantly higher offer. So with that in mind, I guess, she had no need to submit our 2nd offer to the bank. I hate to say, but my husband and I felt that something more than "meets the eye", was going on with this situation  It all seemed a bit fishy, especially when we did not get a counter offer from the bank. Maybe NC rules are different.

The banks will usually counteroffer but not always, sometimes they just reject the offer, especially if they deem it to be too low.  Some of the banks are still using a automated evaluation similar to zillow.  Do you know if they did an appraisal or BPO (Broker Price Opinion).  Listing agent should have that info.  The listing agent should also be able to provide you with the communication from the bank in regards to the rejection.  From that point, the banks rejection could mean that the contract is void and that new offers can be submitted, depending on your contract and short sale addenda.

In the end, the bank wants more than you are willing to pay, move on and find another home, there are plenty out there.

Kimberly, from what I can tell, that is what happened. Juanita's offer was rejected, not countered.  It looks like the listing agent had another offer, possibly a back up or an offer in waiting should the first one be rejected.  In Florida, we have a contigency that the lender or lien holder approve the purchase price and terms, I wonder if a rejection means the contract is no longer in force?
Thanks for all the responses. I have moved on. That house is just a memory!

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