MULTIPLE SHORT SALE OFFERS

NORTH CAROLINA SHORT SALE ADDENDUM. The North Carolina Short Sale Addendum to the Offer to
Purchase and Contract states: “Buyer and Seller understand that additional offers may be received
by the Seller’s Agent, which must be presented to the Seller pursuant to North Carolina law. Such
offers may be accepted by the Seller as backup contracts and forwarded to Lien holder for review
and approval.”

The lienholder is not a party to the Offer to Purchase and Contract. The Short Sale Addendum
specifically gives the lienholder the right to accept any offer, regardless of its Effective Date. The
lienholder is taking a loss on this short sale and rightfully has the ability to mitigate its loss by
accepting a higher or stronger offer even if it was signed much later in time than the first or primary
offer.

NORTH CAROLINA REAL ESTATE COMMISSION REQUIREMENTS. The North Carolina Real Estate
Commission requires that the real estate agent or the attorney handling the short sale inform the
bank of the existence of another offer, even if it is lower. Further, the North Carolina Real Estate
Commission has stated that, even if the Seller does not accept another offer as a back-up offer, the
bank should be informed of the unsigned offer as they have a monetary interest at stake.

BANK POLICY. Most banks have a policy that they will only review one offer at a time. These
banks often will not want the real estate agent to forward additional offers to the Bank unless the
primary offer is terminated by the Buyer or rejected by the bank. Some banks, usually smaller
local or regional bank, want to see all offers and will choose the one they feel is the best.

RECOMMENDATION. The Real Estate Commission is the governing body for the real estate agent.
Even if an attorney is handling the short sale, it is the real estate agent’s responsibility to follow
the requirements of the Real Estate Commission. I recommended that the real estate agent make
sure that the attorney handling the short sale inform the bank of any additional offers, even if the
bank has a policy to review one offer at a time and does not want the real estate agent or attorney
to forward any back-up offers. That way the requirements of the Real Estate Commission are
followed.

A simple email to the bank’s negotiator informing them of another offer should suffice. I don’t
recommend that you necessarily have to forward the actual offer to the bank unless they request
all offers as this may confuse the negotiator. (The bank negotiator may think that you are
terminating the first offer and want to submit the new offer for consideration.)

In Blog #9 we talked about Flopping and how withholding information from the bank regarding
a higher offer could be viewed as mortgage fraud. Because of this, I would recommend that,
regardless of what state you are in, you consider informing the bank of all offers as suggested
above. Visit www.wildelawfirm.com for frequently asked questions or to contact our attorneys.