How Should You Handle Multiple Back-up Offers with Short Sales?

Posted on Mar 8, 2011 by Trent Chapman

Often, we hear from the different ‘Departments of Real Estate’ are teaching listing agents that they MUST submit all offers to the lender. Unfortunately, they do not seem to understand contract law and that a non-principal can not accept a contract on behalf of a principal. Yes, you are required to be fair and honest with all parties, but your fiduciary duty lies with your seller. If your seller only accepts one offer, you do not have the right to send any other offers on to the bank, unless your seller tells you to. If you were a buyer in an equity sell, and the buyer signed a contract with you, with some contingencies, but then the seller went ahead and accepted another offer, you would have the right to sue for damages.

In a short sale, it is true that you don’t have an executable contract if it is written, ‘subject to lender approval’ but at the same time, you don’t have the right to overstep your position as an agent and go against your seller’s will. If they don’t want to submit back up offers until the first offer submitted is countered or rejected, that is their will as a principal in the transaction. You often do more harm by getting an unrealistically high offer approved, that will be the first to cancel escrow and the home will often end up foreclosing which is worse for the bank.