Short Sales and Fairness in Multiple Backup Offers

GOOD MORNING LOREENA!  I say, buyers need to know if there are multiple offers.  I have seen too many disappointed and sad buyers who otherwise could have continued their search instead of waiting and waiting and .... waiting.  A client put in an offer on a short sale two days ago.  Yesterday I get a call from the listing agent - he simply said - we have 8 offers.  Enough said - my client decided to withdraw his offer and move on. It's only fair! Nice post! -- Gabrielle

Loreena, since the seller must agree to an offer, signing multiple offers can put the seller at some risk.  Most lenders also negotiate offers separately, so it may be more prudent to keep offers as backups rather than having the seller sign and submitting them.

I agree that if the situation is disclosed to the buyer than it is their decision to continue the process on that property or just move on.  I appreciate agents that put a comment in the Realtor section if there are offers ......saves me a phone call in some cases. 

Loreena you are 100 percent right in your post. If the buyer knows then it is totally their decision and totally fair

Loreena: Thanks for the post. I also think it's up to the buyer, as long as everything has been disclosed. They can make that decision.

I would not wait around as the back-up offer.  The way I look at it is there is only one offer that was accepted, period.  There is no back-up offer.  It is just like any other multiple offer scenario where the buyer did not get it.  If the first deal falls through, then there can be an opportunity to resubmit an offer.  In those cases, the contingencies were home inspection or mortgage contingencies.... in this case, it is short sale approval in addition to the first two.  I would advise the buyer to keep looking for sure as it it is way too risky to wait around... and, their offer was not accepted.

A buyer should know, but the holder of the information is the listing agent, so if they are not upfront with everybody then the buyer will never know. 

Being in a backup position on a short sale is not always a bad thing if your client is not in a hurry to purchase a home. Many times the first offer walks away before the negotiations are done. On a recent listing of a short sale, the offer we were working with backed out on Firday. On Monday we had bank acceptance. The second back up was out of the picture. The 3rd place got the home with a "normal" escrow time.

I do not....one offer is all one needs...if it fails..call back the gang..

http://activerain.com/blogsview/1395205/are-you-holiday-stressed-or-holiday-happy-take-a-2-minute-quiz-

Once the seller has accepted an offer and sent the contract to the bank for approval, one or at most, two back-ups are all that are needed. 

Surely, if a house generated multiple offers, if the first one doesn't go through, there shouldn't be any problem relisting the property.

I absolutely, whole heartedly agree.  As long as you are following the regulations and everything is disclosed, do whatever is in the best interest of your client. 

I submit one offer to the bank and keep all other offers in backup mode. Once the short sale is processed and I know what the bank wants and I learn that the buyer is no longer there, then I go through all the offers that will meet the bank's criteria and contact the agents. If my efforts fail, then I place the listing in Active status again.

I do nothing to keep the backup buyers. They are free to continue making offers on other short sales.

I think you are obligated to your client to accept back-up offers, but let them know they are a 'back-up' offer. This allows the others to make a decision based on the status of YOUR property. Keep them posted of the status so they know if they are still waiting or if it looks like the initial deal is moving forward. Its not fair to make the buyer wait, but I know you want a solid deal in the pipeline also. I think the ethical thing to do is tell all parties involved of the actual status.

Most buyers in backup position continue to look. As long as there's full disclosure it is there choice. Depending on how many liens and the preparation of the paper work, you never know how long or short it will really take.

Hi Loreena... I go back and forth on this issue.  There are definitely different perspectives depending on which side of the transaction a person sits on.  At the end of the day, the seller makes the decision and it does not necessarily have to be seen as "Fair" by everyone, it does, however, have to be legal, follow local MLS rules and not violate the NAR CoE. 

I would want my buyer clients able to have the option of "moving on" if 10-20 offers had been submitted on a property.

Loreena, I just blogged about the multiple offer situation that is so frustrating here in SoCal.

I think the buyer should be made aware of the multiple offer situation.  Just as the buyer should let the sellers know if they have moved on and gotten an accepted offer.  Instead of waiting until nearly the close of their escrow to say something to the listing agent who is expecting an approval any day now.

Professional courtesy goes a long way.

I LOVE the idea of "Active-Contingent."  It would keep the buyer from constantly asking why a property they submitted an offer on that was subsequently rejected is still listed as "Active."  Its almost a taunt to them.

I find that the buyer with the staying power to wait out the bank gets the property in a short sale.  I negotiate each offer in order.  I dance with the first offer until the buyer pulls away and then move on to the second... so on and so on...