In Northern Virginia, our third party approval clause in a contract is actually a contingency. Just like a home inspection or sale of home. It has a certain of number of days that is in place from the date of ratification, and if it expires without the written disapproval by the 3rd party in question, the contract is assumed to be in place and moves forward. In other words, if this contingency expires, then the seller is on the hook to sell the house no matter what the bank says. Here's what is says, word for word:
THIRD PARTY APPROVAL. This Contract is contingent upon the approval of (insert bank name here) by 9pm (insert number of days here) Days after the Date of Ratification ("Deadline"). If Notice of disapproval is not Delivered to the other party by the Deadline, this contingency will terminate and this Contract will remain in full force and effect. No Notice of approval is required. If Notice of disapproval is Delivered by the Deadline, this Contract will become void.
Why then, when calling to find out the status of several short sale homes in my marketplace, to set up some showings, did I find out that some listings had MULITPLE, RATIFIED CONTRACT?. To add insult to injury, they were still listed as ACTIVE in our local MLS.
Banks will usually not look at a contract for approval of short sale unless it is ratified (accepted by the seller and buyer in writing). Lisitng agents seem to be putting all the power on the bank. But in the meantime, they are clogging an already JAMMED system with multiple, ratified contracts. And I would hate to see the buyer that decides that they will sue on the grounds of specific performance for a contract that is denied AFTER the contingency has expired and the seller and/or bank has chosen to move forward with another offer. No legislation that Congress passes can help a seller in that scenario.
As a listing agent, please understand that, at least in Northern Virginia, RATIFIED still means RATIFIED...even with that 3rd party approval contingency. There should be no such thing as MULTIPLE, RATIFIED CONTRACTS in any scenario.
If you are listing a short sale, your seller(s) still have the power to counter offer BEFORE an offer is submitted to the bank. Try that instead of this multiple offer craziness which will only end up costing you and your E & O Insurance Company money. Just think of it this way, would you RATIFY mulitple offers with a HOME INSPECTION contingency? 3rd Party Approval is just a CONTINGENCY.
As a selling agent, make sure to add that question to your ever growing list of short sale listing questions. Do you have any offers? Are any of them ratified? And if you get lucky enough to have a contract ratified by a short sale listing agent, please make sure you are the ONLY ratified contract.