When I wrote “When is a Contract NOT a Contract?” it stirred up over 40 comments and some controversy.  The crux of the matter is that many Destin Florida listing agents are accepting more than one “primary” contract on a Short Sale listing.  There is a prevalent belief in the Emerald Coast real estate market and others, that a contract is “not” a contract despite being signed by both buyer and seller, until the bank approves the price and short sale. Thus, the thinking goes, the Short Sale seller is not truly obligated to the buyer who wrote the offer, and can simply sign multiple contracts with parity.  Because of this misconception, many buyer’s agents also think release and cancellations are not needed when buyers “walk” prior to bank approval.  Also, the practice of accepting more than one “primary” offer is likely a disservice to sincere buyers who are subjected to auction-type handling of their offers.  There may be legal ramifications, as well.

I have since tracked down a definitive answer from the Florida Association of Realtors staff attorneys, as written in Florida Realtor Magazine, September 2008.  The following is from the Legal Q&A that appeared on page 9 of the magazine.  It clearly reinforces the fact that a Short Sale contract is a “contract” and that the seller should only sign another contract with a “Back-Up” clause attached.

Legal Hotline

Contracts
Q I have a fully executed FAR9 Residential Sale and Purchase Contract along with the FAR SSA-2 Short Sale Addendum to Purchase and Sale Contract. We are still within the time period in which the seller may obtain the lender’s approval of the short sale, and now another buyer has made what is arguably a better offer. May the seller sign the second contract?A The seller may sign a second contract but should do so only as a backup contract with the appropriate backup contract addendum attached. If using a FAR contract, use addendum P(1) from the FARA-9 Comprehensive Addendum. Of course, the FAR SSA-2 Short Sale Addendum should also be used.

Here is the link http://www.floridarealtors.org/FLRealtorMagazine/2008/September/0908LegalHotline.cfm

The post Florida Short Sale Contracts Are "Contracts" first appeared on Rulnick Realty.

#1 Peoples First – Florida’s Community Bank – Denies Short Sale Despite Cancer Diagnosis

#2 Eglin Federal Credit Union – will not do Short Sales

#3 Whitney Bank – will not do Short Sales, but releases lien and seeks deficiency

#4 Vanderbilt Mortgage – claims will not do Short Sales, but will look at a price pulled out of the air

#5 RBC Centura:  Taking Cars in Short Sales?

#6 Countrywide and PMI Short Sales

#7 Ocwen/LCS Won’t Budge

#8 Washington Mutual Won’t Waiver

#9 Bank of America – Issues 2 Contradictory Approval Letters

#10 Aurora Loan Services – Won’t Pay Closing Costs

The post "Top 10" Worst Short Sale Lenders Awards – 2008 first appeared on Rulnick Realty.

I received an offer on one of my Destin FL short sale listings.  It was a well-done contract with a fair price- $270,000- just slightly low, but in the realm of “workable” for acceptance by the short sale lender, Chase.  The selling agent said the buyer was a single school teacher, and he provided a pre-approval letter with the offer.  My seller was excited and signed the purchase agreement right away.

The next day, while finalizing my short sale package, the seller called my office with potentially disturbing news.   He said his neighbor mentioned to him at the mailbox, that she received an offer on her own identical floorplan short sale home- from the same agent on the very same day, from the same buyer, the “school teacher”.  The neighbor happened to be a real estate agent.  Concerned, I immediately called the buyer’s agent.  “Is this the same buyer? Does he really intend to buy two homes? Or is he playing games with my seller’s time and my time, waiting to see which offer was accepted and a better deal from the respective short sale lenders?  Would he use the ‘as is with right to inspect’ clause as an out on buying the house he didn’t want? Does he understand both of these properties had to go into ‘pending’ status with our Board of Realtors?” 

Very dismayed, I got uneasy answers from the buyer’s agent.  He said with a chuckle “Yes, he would buy both homes if both were accepted. (On a teacher’s  salary?) Oh, and don’t you know, Wendy, that this is what you should do anyway, this will help you out to see what the bank will take.  This is how short sales are done”, he instructed me.  I explained to him that both houses had to go under deposit per our board rules, and if the buyer was really playing games, there would be serious consequences for one of the sellers.  I hung up the phone and called the neighbor, the real estate agent.  She told me her suspicions were the same as mine, that the buyer was basically using each seller, and that she had unfortunately signed her offer, too.  She was going to speak with her attorney.  I called my seller, and he said he did not want to proceed with the contract unless the buyer decided “which home” he wanted, and to tell the agent to tear up the other contract, or he might have an ethics violation.

The analysis of this situation is indeed disturbing.  The buyer has every right to make an offer on as many properties as he wishes to purchase.  He also has a built-in “out” with the inspection clause, and can easily trump up an acceptable defect to nullify any contract.  But, is his intent legal, if he cannot perform on all his contracts?  This story has yet to be completed.  When I left my last message with the selling agent, his voicemail said, “Thank you for calling Josh, your ‘honest’ Realtor in Northwest Florida.  God bless. ” 

The post "Sly" Short Sale Buyer – A Cautionary Tale first appeared on Rulnick Realty.