The past few months I have had several short sales in review/process and I am receiving 2nd and 3rd back up offers as well. Has anyone else experienced this? I know that the banks want the highest and best offer, but alot of times, the short sale lender is already reviewing offer #1 before I get the 2nd or 3rd offer. Any advice on these types of situations??
Once you have an accepted contract, you have to work that one to the end. Don't submit additional "offers" to the bank.
I agree with Wayne. Don't listen to the illegal lies the banks will feed you. Get offers (including highest and best offers!) seller accepts ONE, submit that ONE to the lender and work on that one, list the property under contract on your MLS. The lenders will feed you garbage about multiple offers, but don't listen to them!
In Florida and in much of the country, properties are getting 5-10 offers withing days of hitting the market.
Thank you!! This helps a lot. I asked our in house attorney and he said, we work for the sellers NOT the banks! :)
Backup offers are the saviors of many short sales. Our policy is to keep them in the order that they were submitted. We never submit multiple offers to the banks- and many banks now won't accept more than one offer. If a higher offer comes in, we NEVER pull to first bank submitted offer. The backups are there just in case the buyer won't come up to a bank counter, or if the buyer walks.
Handle it like you would handle another other multiple offer situation on a non Short Sale. In accordance with your Client(s) wishes and in compliance with your State RE Licensing Laws.
In the state of California, I was told by the Attorney at California Association of Realtors that if a higher offer comes in that we should notify the lender in writing that we've received a higher offer and how would they like us to proceed. If the bank doesn't respond, then we've done our due diligence in notifying them. The attorney stated that sometimes after the short sale approval a bank will ask an owner to sign an Affidavit that they received no higher offers. If we didn't put the bank on notice, then we could not have our Seller sign this affidavit, because it could then be potential fraud, per the C.A.R. attorney.
I'm guessing this is your first short sale...it's treated just like a normal sale one accepted offer only.
I have accepted a strong backup if it is cash...just in case #1 bails. But it stays in my file and the lender doesn't know about it unless #1 bails..
I'm in California...I have never seen an affidavit asking if the seller received a higher offer. After you have an accepted contract and change the status to pending on the MLS why are you still getting offers?
The first time in my 3-year short sale experience that I submitted 2 multiple offers to the Lender two months ago. One is full price with an FHA loan at 175K and the other is cash purchase at 140K. The Lender preferred the one with a higher payoff and treated the cash purchase as a backup offer. Later on the accepted offer bailed out and the cash offer was withdrawn. Now, the property is back on the market.
Definitely not my first short sale at all, I have closed hundreds of short sales. I was just wondering how everyone else handles the multiple offer situation. I handled mine correctly and submitted them one at a time. I just closed on the 2nd offer (buyer on the 1st offer wouldn't increase the offer to meet the banks counter), so all is well!! :)
Yes, take them as back-up offers. You are not obligated to send them in. Remember that you have a binding contract between the 1st offer buyer and the seller.
Cyndi, don't base your conclusion upon not legally being able to, because you can, it just doesn't make sense for the owner who we are working for. You're right that there is a binding purchase contract in place. But, that contract is contingent upon lender approval. If you notified the lender of a better offer, and they then denied approval for the first contract so they could proceed with the higher offer, the first contract would then be null and void-all perfectly legal. Of course, this would be crazy and I won't do it-not because it can't legally be done, but because it's counter productive.
Wayne, you goal is to assist in your client's ability to get a short sale completed and be free from a default judgement. As long as you are within the bounds of your current contract which allows time for your client to take another offer, then do it. Every time you change the offer, you are starting over again. For instance, I had a contract in processs and there was a clause which allows the seller to notify the current offer that they are taking a back up offer. On that particular short sale, I bounced 2 buyers out because each subsequent offer was ALOT stronger than the one previous and it was within the time of the escape clause. (It went from a down payment assisted State program which is limited in funds to a 3% down conventional to a 20% down conventional). Wayne, if it was within the terms of the contract, you are still legally bound to abide by the terms of the contract. I had a situation where the buyer-investor who was bounced filed suit for breach of contract. If I hadn't followed the terms of the contract, she would have won. As it was, she wasted a lot of people's time.