WALK THIS WAY... CAN BUYERS JUST WALK AWAY FROM A CONTRACT?

Home : Blogs : Allison Stewart St Cloud Fl Realtor Osceola County Real Estate 407-616-9904 : St.Cloud Homes & Land Florida Real Estate Insights

WALK THIS WAY... CAN BUYERS JUST WALK AWAY FROM A CONTRACT?

Exactly what prevents a Buyer from walking away in a Short Sale Contract? In some states,apparently nothing. In other states like Florida plenty. The point of signing a Purchase Agreement is intent.

There were some interesting comments flying back and forth between experts in a recent post THERE IS NO CITY LIKE PUGNACITY

If a buyer is floating offers which they feel are not binding and can walk away at anytime, should they be entitled to get their "Good Faith" deposit back?

Unlike tradition Real Estate transactions, Short Sales require the Approval of a third party (Seller's Lender) to accept less than is owed against the property. However, the seller still owns the property and must enter into a Purchase Agreement with the Buyer. The Purchase Agreement most commonly used is the "As-Is" in which repairs are deleted.

It is a legally binding document. Once signed by the Buyer and accepted and signed by the Seller

(Yes, even in a short sale the Seller of Record STILL owns the property) it is an Executed Contract pending Third Party Approval.

At which point "Good Faith" money or deposit is usually required unless otherwise agreed to in writing. For Instance: "Upon Acceptance of Third Party Approval"

The short sale addendum overrides standard time frames allowing the Seller's Lender additional time to review the file and make a decision to release the lien against the property for less than is currently owed.

Buyer's looking to bail out, hanging their hats on the "As-Is" Time for Acceptance" Clause don't really have a leg to stand on IF they have also signed the Short Sale Addendum. Unless it is past the 45 days grace period. In which case they have 5 days to Notify the Seller in Writing they are withdrawing their offer.

As-Is with Right to Inspect. If the buyer is not satisfied with the results of a Home Inspection, they are entitled to a refund of their good faith deposit and allowed to cancel the Purchase Agreement without penalty.

If they are just plain tired of waiting...maybe not.

SECOND THOUGHTS

A Buyer who is having second thoughts....should have thought about that First before signing a Contract.

Second thoughts or Buyer's remorse is NOT usually a good enough reason to get "Good Faith Money" returned.

CONSIDERATION

The point of "consideration" also known as "Good Faith Money, Escrow or Deposit" in a Purchase Agreement is to BIND the agreement.

Should buyers be allowed to just walk away? Should seller's let them?

Real Estate Professionals are charged with the responsibility of educating our Buyers and Sellers and protecting their interests in the transfer of Real Property. Make sure Buyers and Sellers clearly understand what they are signing.

St.Cloud Homes & Land, LLC

Allison Stewart Broker, SFR, CDPE

407-616-9904www.kissimmee-stcloudflhomes.com

St. Cloud Homes & Land, LLC YOUR Local Real Estate Experts serving Home Buyers/Sellers in Kissimee, St. Cloud Fl, Harmony, Lake Nona, Anthem Park, Bay Lake Ranch, Lake Lizzie, Reunion, Celebration, Lakepointe, Steven Plantation, Acadia Estates, East Lake, Windermere, Bay Hill. Our unparalleled service begins with YOU.

For a free consultation call us 407-616-9904 or visit our website or email us

Posted by Allison Stewart St Cloud Fl Realtor Osceola County Real Estate 407-616-9904 on 08/14/2009 05:15 AM

Comments (55)

Buyer Remorse- in the ActiveRain Channel

walk this way, contracts, allison stewart florida real estate broker realtor st cloud florida, buying and selling in stcloud florida allison stewart realtor

Generate short URL

Post is included in group: Fraiche Aire
Post is included in group: Prime Time
Post is included in group: The Lounge at Active Rain
Post is included in group: Realtors®

55 Comments on WALK THIS WAY... CAN BUYERS JUST WALK AWAY FROM A CONTRACT?

AUG

2009

Experienced agents are not "FOOLISH" enough to put our buyer client's earnest money at risk. There are many ways to write an offer to the seller/owner that, if accepted, permit the buyer to withdraw the offer while awaiting the third party approval.

We have "TIME IS OF THE ESSENCE" in our contracts which provides for specific dates and if one party fails to meet a date, upon NOTICE, not addendum, the other party can void the contract.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~`

OUR CONTRACT CONTAINS THE FOLLOWING OPTION:

d. Timeframe for Additional Deposit as provided in Paragraph 7(b) of the Contract, if any, shall be measured from:

􀂉 Date of Contract Acceptance; OR 􀂉 Date Seller delivers evidence of Third Party Approval to Buyer

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

BUYER'S AGENTS MUST PREPARE THEIR BUYER FOR THE usual delays in obtaining THIRD PARTY APPROVAL. However, since there are no guidelines and the buyer's agent is not involved in the communication between the listing agent and seller's lender, the HOME BUYER is protected through the contract and is provided an opportunity, after an agreed upon time frame to WITHDRAW their offer, which is an offer until approved by the third party.

Our buyers may have a contract but we continue to look at other homes. In fact, we stay on top of the new listings, just in case a non-short sale desirable home is listed for sale. With a non-short sale, the TIME IS OF THE ESSENCE protects the buyer.

Buyer's agents need to know how to protect their buyers.

We surely cannot rely on a seller's agent to do it for us.

DAN- Interesting point- however, it does not negate the walk away even if a shorter period of time is allowed. If the inspection is unsatisfactory the buyer should in MHO be allowed to exit the deal. However, if there are multiple contracts in play I have a greater issue with that- as homes got o pending status and are in effect off the market while they are still shopping and using the buckshot effect to see who gives them the fastest answer.

LENN- I agree that there are many ways to protect a buyer's earnest money. And that we have the responsibility to do that if we represent the buyer.

Time of the essence in short sales (at least here in Florida) does not apply in a short sale scenario. The Rider to the Purchase agreement takes priority over the standardized Purchase Agreement time frame and commenses from the time of the lender's approval. (up to 45 days) regarding inspections, etc.

The best way I know of is to make the Good Faith Deposit due "upon Lender's Approval" that way funds are not tied up indefinately.

What we are lacking is a Purchase Agreement specific to Short Sales- only an Addendum exists so far-which is a leading cause to misunderstandings and cnflicting terms of Purchase Agreements.

Time of the Essence in Standard Transactions certainly does protect the buyer- I am not sure what your market consists of regarding the percentage of short sales/REO's vs Traditional Sales, but I can you tell you that here it is like 5:1 in favor of the short sales.

I have told many of my buyers that based on my experience, REO properties are more likely to get a faster answer as lenders are more inclined to liquidate them faster than when they are in the loan negotiation phase (which can take upto 10-12 weeks) of the Short Sale Process and not owned at that point by the lender.

Remorse is not an excuse in either case. Do you agree?

Morning Allison,

Short Sales can go smoothly and close in a timely manner or be prolonged forever. Buyer's Agents should include a time-frame in the Contract offer which protects the buyer. Most Short Sale issues I have read about concern transaction times. Including time commitments protects the Buyer and often times encourages the seller's agent and the bank to move things along.

I am fortunate enough to not deal with many short sales. I would certainly build protections in a offer with my Buyer clients based on there time frame and expectations.

I am 40 days sitting on a short sale contract right now. Escrow was contingent on third party approval and all inspections, and appraisalswere to commence with proper times after addendums were received from the bank. Now my buyer is getting nervous and we'll probably be out of the offer as the contact was conditional on third party approval within 60 days.

Oops Allison, I went to edit my comment and hit delete by accident.

I have heard of a practice in our area where an agent will write as many as three to four ratified contracts with one buyer on different short sales concurrently and then wait to see which ones pan out. I am guessing the EMD is not deposited and the managing broker does not know what is going on - I don't know how these agents do it. The buyer than uses the home inspection or other means to back out of the contracts if needed (the buyer is only going to buy one of them).

Goodmorning Allison

Our short sale addedum is very clear and consise. Clock doesn't start ticking for the buyer until their is an agreement between the lender and seller. No earnest money, no inspection until that point. They can walk away at any point before that. Every state has differnent rules and regs would be my guess.

Short sales where the negotiation is done by the seller with final approval by the bank is very frustrating. We just don't see that the seller really understands what they are doing, thus the pricing and negotiation makes you feel like it isn't really much of a short sale at all. When an offer is made here, the seller only get a copy of the check. No money is exchanged until everyone is in contract. Even then, the buyer's earnest money is fairly well protected.

HAL- These things (short sale) seem to have their own set of rules I am now seeing more Broker generated Rules as attachments than ever before. Including one I found today asking buyers for $2500 to pay the Processor.

Allison

Short Sale walk aways canbe a real problem, buyers write 5-10 offers and see what happens. Are they serious buyers when they right several offers on short sales.

This is just part of the "fun" listing short sales. We do our best to educate the Realtor on the other side, and we inform them of what we are yup against. A single loan with a local lender or someone like Homecomings is a breeze compare to Chase and BOA-Country wide, and a 1st and 2nd from differnet parties with a mortgage insurer thrown in is a long term headache. If the buyer knows the obstacles up front we can keep them in, but it isn't a contract until the fat lady signs it, so we still have to sell multiple times in some cases. Maybe uniform national rules, and a sped up process would help, but I am not holding my breath for that to happen.

Buyers that walk on my short sales will forfeit their deposit.

I agree with Lenn that there are many ways to protect the buyer when making an offer on a short sale. of course none of them would be accepted by my seller. A contract is a contract. If thew buyer of a short sale expects the seller to take the property off the market and honor the contract then the buyer will put up a deposit and will not have "escape clauses" in the contract.

The fact that there is a "3rd party approval" contingency in the contract does not make it any less of a contract. Short sale contract are written with the intent to get to closing just like any other contract. Anything less than this is a waste of time and foolishness and will not happen on my watch.

My seller just accepted a contrcat yesterday. The closing date is 15 December with an additional 45 days built in if we need it. The buyer is placing a $2,000 deposit. If he walks he loses it. Since the buyer now has realistic expectations the short sale will be approved and the buyer will be getting a very good property at a good price. That's how a short sale works.

For my seller to accept a contract where the buyer is not committed can cause the seller to be foreclosed on from wasting time. This is serious business and needs to be treated as such. If a buyer can't wait 3-5 months to close then they should not in any way be looking at short sale listings. It's not complicated.

These discussions leed me to believe that I need a legal consultation. I'll get one scheduled today and afterwards pass on what helpful info I can.

It's interesting to read a contract is a contract when the banks themselves are not honoring these contracts. I undertand they are contingent on third party approval but when the banks decide it is ok to waste 2+ months of someones time and money before they grace us with their response they deserve to have the buyers back out.

I had one where we were at day 70 with still no response. We had put in 45 days...only one loan...we walked.

Alison,

You raise a very interesting question, because sellers can definitely be damaged by buyers who walk away. It can mean the difference between a short sale or a foreclosure on their credit if the bank refuses to postpone a foreclosure sale while they try to find another buyer.

The issue around my area (Central Coast of CA) is that most listing agents on short sales advise their clients to not even sign offers -- so no the buyer is definitely not bound in that case! Or, they tell buyers that they must submit all offers to the bank (over a 2-3 month period) -- so you are now subject to the never ending bidding war! Give me a break! The problem really is that many agents have not been given any real guidance on how to run a short sale. Due to lack of experience or education, some will do anything a bank negotiator tells them to -- yet it is their license that is at stake, and your fiduciary duty is to the seller -- not the bank! I thought that this would improve as agents got more hands on training. But in our area it has actually gotten worse especially with the inventory shortage. When you write on a short sale it is very difficult to know where you stand. Accordingly, many times buyers who have been through the drill don't take short sales very seriously - they see them only as possibilities. When I am the listing agent, I approach buyers very differently -- I have my seller select one offer, and we sign it! Because dealing with other short sales is like the wild wild west, this usually induces them to wait around. Also, if the wait period in the addendum is about to expire, I ask for an extension! These are not earth shattering concepts, but I have NEVER had another short sale listing agent treat me the same way when I represent a buyer.

Our short sale addendum allows you to pick the amount of time you will wait for bank approval. I've gotten offers from agents where they left it blank! Hello! In CA on our short sale addendum you can check a box so that the deposit check and contingencies do not begin until the day AFTER you have full short sale approval. Most agents at least do this in their offers. And of course we've all been in the situation with great buyers who patiently wait for 3-4 months only to be told that the bank won't approve the short sale. Since the seller can't make any guarantees that the sale will actually happen, how fair is it to try to pin the buyer to the wall and keep a deposit on a transaction where the seller wouldn't be allowed to get any funds anyway?

The key in a short sale is finding the RIGHT buyer. For example, I have a client who bid on a BofA short sale (read typically a 2-3 month wait) and her mother lives in the same condo development. I pointed this out when I presented the offer. If I was the listing agent, I would have jumped on that offer (it was over list price too!) because I know that buyer will likely wait for the home, and if your buyer bails on a BofA deal you are almost back to square one in terms of wait time to get a new approval letter with a new buyer's name on it -- stupid I know but an agent with short sale experience KNOW THIS. But have I heard from that agent who describes himself as a short sale expert? No, and it has been over a week! Someone who is just making a high offer is not necessarily your best buyer for a short sale. In fact many times high bidders are the worst buyers for short sales, because the high bid is unrealistic, and they are already at the point of impatience that is why they are bidding high! High bids are great for REOs, but not short sales. The best way to flush them out is to ask those buyers to put their deposit in escrow -- this will usually reveal that their offer is just a bluff and they want to keep their options open.

It's a crazy world out there, but I would assess bad buyer behavior at about 10% of the problem, bad seller behavior at about 10% of the problem, and bad bank behavior at about 80% of the problem. Let's face it if they would approve short sales in 2 weeks, we wouldn't be having this discussion!

Great post!

Tni LeBlanc, JD
tni@mintprop.com

Just to piggyback on Ann Bannana's comment, here in Arizona, there's absolutely no commitment on the buyer's part. Although some banks/lenders are starting to require that a nominal earnest money deposit (usually about $500) be deposited in escrow upon acceptance by the seller. The money is usually non-refundable until 45 days out, upon which the buyer can cancel and walk away. Anyway you cut them though, short sales are arduous at best. Thanks for the post and best of luck to you.

A friend was recently trying to purchase a short sale. The agent took her offer directly to the bank and did not have the seller sign the contract.

Alison - my hat's off to you. What a tough gig! You guys definitely earn your pay : )

I just love a good discussion- and there have been some great comments coming-the time consuming task of preparing the short sale, (for those who list them) the seller's jeopardy being a very valid point, and buyer's who cannot wrap their heads around it thinking they can bail at anytime perhaps need better scrutiny.

I had on buyer tell say once, "the house gave me a "bad feeling" can I get my money back? Upon careful review of ALL the documents she signed..nowhere did I see a "BAD FEELING CLAUSE" Funny, it did not come at the time she went on her first, second or third showing of the same house, nor it come when she signed the purchase agreement, not in the 30 days since she signed the Purchase agreement, but the day AFTER it went to a real person assigned to make the decision at the bank. What happened?

I guess her Cosmic Feeling Meter got stuck in a time warp and only after a case manager was assigned could it free itself from the gravitational pull and enter the orbit of remorse.

At present she is still in the contract because, the prospect of losing her deposit gave her an equally "bad feeling" I guess.

There are some very good points made here. Thanks for opening this discussion.

We have a short sale addendum that states, "mutual acceptance occurs when third party approval has approved." Earnest money isn't due until' we have mutual acceptance, so their earnest money is never in jeapardy with clients we work with here.

Some Agents are putting "Upon Acceptance of 3rd party approval" for Deposits. However, some listing agents are asking for copies of Escrow Checks (fax copies, I am told are legally binding) to accompany the offers.

I am also seeing a large number of Independant Addendums appearing lately on our local MLS under attachments. These additional terms vary from company to company vastly.

ALL however, are requiring the Buyer's Agent as well as the buyer to sign they have been acknowledged.

The Standardized Short Sale Addendum in Florida seems to be straight forward in dealing with the acceptance delays up to 45 days extension, and up to 10 additional days to close.

It does however cause confusion to many buyers who have previously bought Real Estate conventionally.

Hi Allison,

I think you may have a Trojan virus some how attached to your post here. I've tried twice to coment and my anti-virus popped up referencing this URL. Great post, but thought you'd like to know about the virus.

Your last paragraph says it all. We as agents are supposed to educate the buyer and the seller about the short sale process. If we don't do that we are doing our client's a disservice. If you don't know how to explain short sales to a buyer you probably shouldn't be doing them.

Allison, I too got a AV siren from your last 2 posts.

Allison we have an attorney written short sale addendum that I think is good, but it also requires EMD when the lender approves. What I am seeing out here is the CDPE's are going rogue and are having all sorts of created addendums that are now required or the seller won't accept the offer. These contradict our state driven attorney forms. They have commission clauses in them, which violates the Realtor COE. Commissions don't belong in the purchase and sale agreement.

My buyers aren't considering those homes. I understand BB's point, but it is the rare buyer willing to wait for a particular property. My buyers steer clear of them because they can. Thankfully, only a small portion of our market is short sales. If they were really good deals, then more buyers would be willing to wait, but they aren't good deals out here.

I am not a fan of the making several offers on short sale properties and see who responds first tactic. I expect my clients to act in good faith, and clearly that is not acting in good faith. Once the seller accepts there is a binding contract. It's one thing to revoke an offer, that isn't accepted. It's another thing to not act in good faith on a binding contract.

On the tail-end of Melina, as we are licensed in the same state, yes we don't have too many shorts here (knock wood). And what she brings up is very relative -- banks interfering with the contracted commissions (between seller and their agent/broker). I've always felt that was a real "not good" thing to do.

We list and close our short sales. If a buyer walks on one of our short sale listings they WILL NOT get their Earnest money back if they walk before the expiration period for acceptance of short pay off by third party lender.

Our attorney drew up our short sale addendums because our board one is very weak and vague.

We only submit one offer to the short sale lender so we make sure it is a good one and we hold the buyers feet to the fire.

If their agent does not want them to do that, that is their choice. However, a buyers agent can NOT TELL their client what to do. They may advise but not dictate. If the buyer wants the house, they have to play ball fair and square with our sellers or our sellers will not accept their offers. Katerina

I think on short sales they should be able to walk away when its taking too long.

In my market, nobody puts money in escrow until the bank approves "in writing" the short sale. So, there is no good faith money to lose. Buyers are putting offers on many homes at the same time and seeing which one happens first. It's not really fair, but it's the nature of the market were in.

As a listing agent, it's not the end of the world if the buyer walks. We just call the next offer on the backup list, then call the negotiator and tell them the 1st buyer walked, but I'm sliding the next offer in. As long as the price, terms, etc. are close, the banks will just keep chugging along with the new offer. No reason to panic if the buyer walks.

Katerina- I was hoping you would chime in! Thank you. I agree with both you and Broker Bryant- if a buyer walks arbitrarily, without just cause but rather because of cold feet or second thoughts they should leave the deposit behind.

For listing agents substituting another offer may be less problem-as some here have said but for buyers agents it is a bigger problem I think and certainly a time consuming unproductive activity-

Hi Alison - In our area, it is pretty much like Andrew (#31) describes. A photocopy of the deposit check is sent to the listing agent with the offer, short sale addendum, and pre-approval letter from the buyer's lender. If accepted by the seller, the seller's short sale package and the offer and accompanying docs are all sent to the seller's lender for review and approval.

Until the lender okays the deal, there really is no contract, no escrow is opened with that buyer, and the deposit will not be lost. Some listing agents will have their clients accept the first offer, no matter how bad, because that is the only way they can submit any package to the lender to see if they will even approve a short sale.

At that point, the lender will usually either approve it as is or approve if there is a different allocation of costs than what is in the offer, or approve the concept but demand that the price be higher. Then if the first buyer can't pay that amount, the seller at least has an approval of their package and of the price at which they can accept a deal, and the next buyer can have a really fast transaction.

Once an escrow is opened with a buyer, the buyer has 3 days to get the deposit funds to escrow, and that is the first time that the deposit can be in jeopardy in most instances.

There are a ton of extenuating circumstances in a short sale situation. Listing agents are handling short sales a hundred different ways. I have seen listing agents have their client sign multiple offers and submit them all to the bank as they come in. I don't see how this is possible, even legal but when I called VAR legal counsel they said that it was. I still disagree but since I am not a lawyer we have an addendum to our sales contract when we represent a buyer client that gives them the right to walk at will and we do not collect an earnest money deposit until the lender has approved the sale.

The last short sale we were involved in the bank was supposed to review the file on August 7 and now they have postponed it to the 24th. Banks need to pull their heads out of their butts and get with the program. NAR needs to come out with some clear rules on how agents should work with other agents in regard to short sales.

While I don't think a buyer should dance away without reason, the time-frames many of the banks seem to (not) work in are also shameful. If the bank can't get their crap on the plate and served up in 30 days, they should have to compensate the seller for the lost sale.

All very good and valid comment posted above on this interesting post.

Thanks for getting it out to us at AR ..... I have it bookmarked.

Patricia Aulson/portsmouth nh

I read every word. Such a frustrating situation these short sales can present. I am in one now, where my buyer has (reluctantly) agreed to wait 90 days for the bank. With all the delays of gettin this offer even into the system, I am wondering what kind of a chance we have that we will mee the time frame. I beleive the buyer will take it as an "omen" that she is not to buy in Palm Coast and therefore I will have wasted the 6 mths or so I have invested in her transaction.

I really love it when the buyer wants to argue with the bank or try to "teach them a less" or get a rationale explanation - fat chance!

Hi Allison -- Great post and very informative. I tell buyers, short sale or not, how earnest money works in detail so there is a relatively little chance of surprise, regardless of outcome.

California has a short sale addendum that allows the buyer to state how long he will wait for bank approval. After that time, he is no longer bound to the contract if the bank hasn't approved the short sale.

Additionally, it allows the buyer the option to not put in a deposit or start inspections until after the bank has approved the short sale.

Is this best for the seller? Probably not, but so many short sales don't close, that it's also important to protect your buyers and try to interview the listing agent.

AUG

2009

Allison- it has amazed me over the years how many times I've heard buyers say..."Well I can just get out of it(the contract) later if I want". I want to scream when I hear that. I think it has a lot to do with as Realtors and property owners- we'd rather just let them walk instead of fighting it in court(which takes time, money, etc).

True- Lots of great input here and some good advise everyone can benefit from. I am amazed at how agreements vary from state to state.

Short Sales do skew traidtion sales perspective and because there are no real time lines banks must follow, that certainly does make it a free for all when it comes to acceptance.

I just had a seller walk, says she thought that she could change her mind anytime before closing. Of course I,m to blame for not telling her that.

The problem is that there are only rules on one side of the transaction. The banks can do as they please, but the buyers are expected to wait around forever... Either they both have real timelines with punishment for failing to meet them, or either side can dance away at will...

I really like Lenn Harley's comment. Especially, this part of it, "However, since there are no guidelines and the buyer's agent is not involved in the communication between the listing agent and seller's lender, the HOME BUYER is protected through the contract and is provided an opportunity, after an agreed upon time frame to WITHDRAW their offer, which is an offer until approved by the third party."

I understand the "short-sale" listing agent's point of view about commitment. However, I know of too many cases where buyers acted in good faith, got hung out to dry for 8 or 9 months, and still the transaction didn't close, because of the bank. I think the word "COMMITMENT" is far too one-sided. No buyer should be expected to commit, place earnest money deposit money into escrow, and then wait for months on end, while other available properties come and go. Time IS of the essence.

Legally, there really is no contract until signed by all parties, and that would include the bank. I had an instance of a bank giving us a verbal acceptance on a foreclosure July 9, but we didn't get signed docs back until the 29th. Part of it was that the bank requires another 8 pages of their own addendums. The other is prolonged process. Their language stated that the clock started ticking for the inspcection from the verbal acceptance, I asked for an extension because it was beyond our control. We got it.

On the other hand, there is a teleseminar on Aug. 18th, hosted by Bank of America and Wells Fargo on how they are hoping to streamline the system working with Realtors. BofA plans to have an oline system where both the agent and negotiator have access to the file in progress. That would be a step in the right direction. I'll be tuning in.

I agree with the other comments that the biggest hurdle is that banks do not comply with the rules we are required to follow. Most will not accept offers with time limitations. There is no 'normal' process we can rely on. Chartered banks are not required to follow state or local guidelines (as per the Supreme Court). We desperately need a better process to facillitate quicker acceptance and closings. Why would any buyer pin all their hopes on one property that they may or may not hear back on? One of my buyers wrote an offer on duplex listed by a supposed ss expert. Never once did I speak with the listing agent. She would have an assistant email me updates on occassion. After 5 months we were declined because it was too close to redemption even though it was a cash transaction. Some properties just won't close. The problem is that we don't know which those are.

AUG

2009

Allison: Short sales have really brought out the worst in a lot of agents. Listing agents can still be found that think the banks that approve these things end up signing the contract (there's a clue that the listing agent never closed one of this sales) and the buyers agents who write multiple offers on multiple short sales. Ugh!

I had one short sale experience. The buyer had owner approval, and we waited for third party approval. After FIVE MONTHS of waiting, we walked. It was unfortunate, but in the end the buyer did eventually find a property with a completely willing seller.

I felt bad for the property owner, but the bank never did say yes or no. We kept extending deadlines for a response out of them. The original deadline allowed 60 days. We extended at first a week at a time, then a month at a time.

All they would have had to do is give us an answer.

By the way, it was a cash offer, within 1% of three solid comparable sales.

Chris Ann- There are people out there holding Broker's Licenses that have no clue as well. A contract is a contract- yuo may want to read Broekr Bryant's lastest post.

AUG

2009

I actually ran this by the Texas Real Estate Commission's legal department. Twice, to make sure I understood it. Here, the option period starts running upon execution date of the initial contract and runs for 10 days (or whatever the option period agreed to is) from the amended execution date (once the bank has given written approval). So, for that entire period of time, the buyer has the right to walk for ANY reason and get their earnest money back; the seller does not. This is in our Short Sale Addendum which is part of the contract.

So, yes, a contract is a contract, and in this case, part of the legally written contract is that the buyer can walk and get their earnest money back at any time up to the end of the option period after the amended execution date.

I agree that except under the standard circumstances buyers should not be able to walk away. I did have one case though where my buyers did walk away from a short sale, but in that case the period where the bank had to approve the short sale expired, so my buyers moved on to other homes. The home wound up foreclosed.

I expect buyers to act in good faith, but the bank should also return the favor in terms of approving the short sale.

AUG

2009

Seems a joke to have the seller "approve" an offer....because when all is said and done it doesn't matter what the seller thinks....seller signs one offer, two offers, a bazillion offers?? And then they're all passed on to the lender?

What a load of poo.

I interview listing agents now to determine their take on processing short sales....do they pass all offers on to the lender, or just one, and leave the rest in backup position?

If agent says they send all offers in to the lender, then we don't even bother putting in an offer.

But I'm in a situation now w/a buyer where we put an offer in on a listing where agent's school of thought is one offer submitted to lender, the rest in backup position.....only to be told that, when our offer was sent in, lender said NO....we want to see ALL offers.....NO timeline given....listing still shows as active in MLS.....agent did call to tell us last week that a 2nd offer was received and forwarded to the lender, a better offer than ours, which means essentially nothing since so many buyers walk.....so we've left our offer on the table and are still looking around....

Is anyone else out here in AR land anticipating a flood of lawsuits against lenders/sellers/buyers/etc when this short sale tsunami settles down?

And WHY, pray tell, are there not universal rules re how to handle short sales?

When did an offer contract, signed by both parties, not become a contract?

What a mess.

Only the Highest and Best Offer should be submited to the Lender. Am I wrong here?

AUG

2009

No, you're not wrong.....because if you were wrong that would mean I was wrong and I'm NEVER wrong! :)

Thanks Coleen! I like your style!

AUG

2010

I just send a comment, here's my email address: ltatb2006@yahoo.com

SEP

2010

Do you "ALL" - (YALL) have to get THE RELEASE FORM signed by all parties including the broker in charge showing the disbursement of earnest money AFTER a contract has EXPIRED (SHORT SALE... took too long.) Just curious how other markets handle this matter.

This blog does not allow anonymous comments

Allison Stewart St Cloud Fl Realtor Osceola County Real Estate 407-616-9904

Saint Cloud, FL

More about me…

St.Cloud Homes & Land, LLC

Address: Osceola CountyRealtor Real Estate Agent, Kissimmee/St.Cloud Real Estate Osceola County Real Estate , St.Cloud Homes & Land , St. Cloud, Fl, 34771

Office Phone: (407) 616-9904

Email Me

Homes in My Area

See these Saint Cloud Homes for Sale on Zillow

Get this widget

follow me on Twitter

Listings

Links

Archives

Find FL real estate agents and Saint Cloud real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.

WALK THIS WAY... CAN BUYERS JUST WALK AWAY FROM A CONTRACT?

Twitter Updates