Can I Change My "Bid" on that Short Sale? Prices Have Dropped!
In one of my very first Short Sales where I represented the Sellers, the Buyer wanted to change his bid on the home AFTER Short Sale Approval. In the end, that Buyer lost a great deal on a great condo when the Sellers feared he'd do the same stunt IF they got Short Sale Approval at the new bid amount and released him from the contract.
If you fear the market is dropping, anticipate that and the amount of time it will take for Short Sale Approval BEFORE you write an offer. And remember, banks aren't taking as long as they used to approve Short Sales.
One of the sad realities of short sales is that they are not short. Although the odd one may be approved quickly, it is still more common for three or more months to elapse before the bank responds. In a market like ours in Northern Nevada, prices may have continued to drift downwards as those months rolled by. So it is not surprising to have buyers like you raise this question if they suspect that their once-upon-a-time scream
ing deal is now merely a fair buy.
Unfortunately, the answer is "no" or at least "not now". Since it's been awhile, let's review the sequence of events we went through to get to this point. First we found the home you wanted to purchase. We wrote an offer, negotiated it with the sellers, and ultimately entered into an agreement with them for you to purchase the house at certain price and terms. At this point, the period for making offers or "bids" including negotiating the purchase price is done; we are "in contract". "But wait", you ask, "if the bank hasn't agreed, there is no contract!" Not true! You are confusing contracts with contingencies.
The agreement you signed contains many terms that you are obligated to abide by. Many of these terms are contingencies. Contingencies are occurrences that must take place in order for the contract to continue to be valid and progress to completion. For example on the seller's side, there is a contingency stating that the lien holder must agree to accept less than they are owed. If that contingency is not met, then the sellers will be unable to sell you the house. They can cancel the contract without penalty because they specified that it was contingent upon this event.
There are also contingencies on our side. Your "performance" or following through to complete the
purchase is contingent upon several things. One of those is a limit on the length of time the seller has to get approval from his lender. Once that time has passed, you can cancel without penalty. Notice I said "cancel", not "renegotiate the price". However, we also have a contingency that the home has to appraise at or above your purchase price. If home prices have dropped as much as you imagine, and the home does not appraise, this is the point in time when you have an opportunity to renegotiate on price.
So the answer to your question is: if you just want out of the agreement to purchase the house, it is possible that we can arrange that if enough time has elapsed since the contract date. If, on the other hand, you still want the house, you just want it for less money, you have two options. One is to wait for the bank to respond and your lender to order an appraisal, then see where it comes in. The other is to cancel the contract now and then submit a new offer at a lower price. The latter is a risky maneuver that will likely not be well received by the seller. They have already forwarded the current contract along with a boatload of financial data to their lender. A new contract will require starting all over with that process. They may prefer to put it back on the market. So you should be prepared to lose the house if you try this route and I don't recommend it unless prices have dropped substantially.
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Copyright © Linda S. Humphrey, all rights reserved
Linda S. Humphrey, M.D., CDPE, e-PRO, EcoBroker, GREEN
Broker/Owner - Humphrey Home Connections Realty, LLC
cell: 775-287-4665
office: 775-232-8515
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