SHORT SALES, How to Have Your Cake and Eat It Too.

Arizona's Short Sale Addendum to the Purchase Contract states that the Seller can continue to accept offers until one is accepted by the Seller's Lender.  Escrow isn't opened until we have a signed Bank Agreement on one of the offers.  Then we have to notify other buyer's agents of the results. The listing remains active until the agreement is reached and a note is made in the remarks so other agents know there is at least one offer on the table and their offers will be submitted for consideration.  I do think occassionally the banks will only look at one offer at a time but for the most part we keep submitting offers until one is acceptable to the Seller's lender.

We are required to put any sale that has earnest money and signed by the seller to be marked pending in the MLS. I have it looks like with the help of others successfully gotten the MLS to put in a new category for pending with lender approval.

CJ :  #1 is the choice. Otherwise, get multiple offers, buyers bailing, banks confused and more make-work.

Thanks for the post, very informative for sure!

Patricia/Seacoast NH

Thanks for the post, very informative for sure!

Patricia/Seacoast NH

You have identified the problem that has been going on for the past three years. Good Luck getting these "short sale" specialists the local boards and the MLS to correct it.

In our county it is customary to keep the listing as contingent.  Fortunately, in California we have a Short Sale Addendum (CAR form SS) that if used correctly can protect buyers and sellers.

The property should be put in Pending status as soon as the buyer and seller sign the agreement as they are the principals to the transaction and third party approval is just another contingency. Agents who keep sending offers to the bank simply don't know what they are doing as the bank is not the seller.

I have a list of short-sale listing agents that I'd like to put in that barrel full of ducks that you're shooting.  Offers are presented to the home SELLER and then the ACCEPTED offer is forwarded to the bank and the status is then either pending (or in our market an alternative is BACKUP).

Once the buyer and home owner sign the contract it is pending in Indiana and the third party approval is a contingency.  EMD is paid upon an executed contract.  It is soooo simple!

I put it in back up as soon as we accept an offer.  We then take back up offers.

I agree - where I live, agents don't mark the accepted short sale offer as pending or u/c with contingencies unitl after the offer is approved by the lender.

This drives the buyers crazy.

I am seeing some agents use the Multiple Counter offer form when buyer submits offer to keep the property on Active by the seller not executing the multiple counter offer form unless buyer puts up earnest money to show that they are serious.

In San Diego, the MLS added a new category before pending called Contingent. This is a category for REOs and Short Sales--when they have been submitted to the bank and are waiting for approval. Once approved, they become 'pending.' I think it is a great idea, and it has worked really well.

So... to take this a step further.

If you present a backup offer to the bank that nets the bank more than the original offer - and the bank as a result requires the higher net proceeds, then what is the process?

Does the original buyer have the right to increase his offer, before you move on to the backup, who has already confirmed a higher net to the bank?

As always, Lenn is correct for VA.....although VAR counsel disagrees.

We have separate statuses for contingency and pending.  I would put it in contingency status and update the broker's remarks stating awaiting 3rd party approval.