Short Sale Under Contract-Can I accept a better offer?

Short Sale Real Estate ContractThe terms of the Agreement of Sale must be followed.  Most standard contracts commit the buyer and seller to each other, so the seller cannot arbitrarily terminate an agreement with one buyer to go with another buyer.

 Generally speaking in a real estate Agreement of Sale, the seller has to sell and the buyer does not necessarily have to buy.  If a buyer defaults, the remedy for the seller is that they keep the buyer’s deposit.  If the seller defaults, the buyer could sue for performance.  In other words, the buyer could sue to compel the seller to sell the property per the terms and conditions outlined in the contract.

Typically, a seller of a short sale commits to the buyer via the signed Agreement of Sale.  In most situations, the listing agent should mark the listing as Pending or Under Contract.  The property is not actively marketed to other buyers while the buyer and seller await a short sale approval, or denial, from the seller’s mortgage lender.

 

Think about it this way:  The buyer stops searching for another property to purchase.  The buyer pays for inspections and perhaps for a loan rate lock.  The buyer may sell their property or terminate their lease based upon the representations of the seller.  Therefore, the buyer is committed to the deal.  The seller should recognize the buyer’s commitment and allow the short sale approval process to play out, without planning to remove the buyer from the deal if a more enticing offer comes along.

Some people erroneously believe that all buyer offers, whenever they come in, should be presented to the seller’s bank.  The seller, as the owner of the property, chooses the one offer that they will accept.  Once signed, that contract is the only one submitted to the seller’s bank for a short sale approval.  The bank is not the owner and does not have the authority to pick and choose among offers.

 

In a short sale, the buyer and seller should commit to each other.  Once the seller’s mortgage lender makes a decision about the short sale, then the buyer and seller can either proceed to closing or go their separate ways.

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