Profile picture for jomama0101

Do I have any recourse if I had a contract on a short sale and it sold to someone else?

My contract did have a due date for bank approval and that has passed.  We submitted an extension addendum but they did not respond.  I now see the house has sold and I thought I had first right of refusal. What did I do wrong?
  • December 24 2013 - Boca Raton
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Answers (12)

Hi Jo,

Here's the Real Deal.   The homeowner can only "Sign" one deal at a time so that becomes the active "contract.

At the same time Florida Law requires agents to "Present All Offers" (found under the agency rules".

What this means is that the Lender, although not the owner of the property and also, NOT A PARTY TO THE CONTRACT  must be notified of all offers.  Failure to do-so would be Bank Fraud.  Then the lender can proceed to a better offer and let the original just expire.

The Lender is NOT a party to the contract.

There are two components to a successful short sale purchase

1.  DO NOT Low Ball - The lender will have the property appraised and wants "Market Value"
2.  The Listing agent needs a negotiating team (usually a closing attorney with paralegals).  Agents should  never take on the negotiating themselves.  The agents job is to sell real estate PERIOD

One more thing:   FIRST RIGHT OF REFUSAL is the wrong form  The FROR is for condo assoc and other such organizations and is placed made a part of the sale to the current owner way back when.  It's purpose is for a condo association to be able to approve a purchase price on a subsequent sale or buy the unit themselves.   The Listing Agent probably had you sign a "Continued Marketing Agreement" or the Short Sale Addendum provides for continued marketing

James Weisenburger
I On Real Estate and Investments
  • December 24 2013
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Profile picture for marc jablon
If the bank did not approve it, you usually do not have a valid contract.  A short sale agreement stipulates that it is subject to third party approval. The bank is that third party.  A suggestion for the next time you look for a home: avoid short sales. Look for a house that the owner controls so that you can get an answer to your bid within 48 hours. 

Short sales are not necessarily bargains, but they are almost always a headache.
  • December 24 2013
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Oh, Rebecca, wetdawgs is just taking a Christmas Eve swing at the real estate pinata. You know, you didn't express the proper amount of remorse or shame on behalf of the Profession, that sort of thing.

I've never seen it happen, and while I don't doubt that it does happen, I also suspect that quite frequently, the "relative" regrets their participation in the matter.
  • December 24 2013
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Profile picture for Rebecca Marvel
What can I do about it Wetdawgs? 

I've tried blowing the whistle and no one does anything about it and really could give a flying you know what.  I'm got tired of trying to do the right thing... it expends a lot of energy and never accomplished anything but frustration.

Same goes for agents that sell their listings to friends and relatives in order to double end the deal... then turn around and list it for substantially more.  Can it be proven that they didn't submit all offers to the seller?  Maybe..

I have sold a lot of properties (my listings) and maybe 10 of them I double ended (out of over 280).  I think it's a conflict of interest and it makes me uncomfortable and it is avoided at all cost.
  • December 24 2013
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Profile picture for wetdawgs
Fraud happens, but it is rather sad that a professional in the area is so glib about the subject.   When it happens in my professional area, it is a big deal and people get fired or worse.

  • December 24 2013
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Profile picture for Rebecca Marvel
I've seen several short sales sold to friends of the owners.... and relatives.  Relatives with different last names.  Why is it so surprising to you? 

People will play the system when they can get away with it and just because a piece of paper says it's required to be an "arms length" transaction won't stop them.... and how do I know this?  Well, when the owner stays in the house and then the buyer quit claims it back to the owner - kind of an indication that something is weird, right?

Do you honestly think if someone can swindle the system without getting caught to stay in a home they love, not lose it to foreclosure and be able to buy it back from the purchaser that they wouldn't take the opportunity?

Of course I could be making all this up right?  I'm not an engineer so I'm not nearly as smart as one.
  • December 24 2013
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Profile picture for SoCal Engr
"I wouldn't be surprised if the buyer is a family member of the owner of the house or a friend.  This happens a lot -- then the owner gets to stay in the house."

irrespective of anything else going on in this thread, how is this possible? Pretty much every other thread on this topic (i.e., potential short sale to relatives) invokes the arm's-length requirement. How is it that your experience is that non-arm's-length short sales "happens a lot"?
  • December 24 2013
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Profile picture for jeremyolsher
Your agent should have asked for the extension a long time ago and worked closely with the listing Realtor to insure that the deal would stay together.  If your contract expired and the property sold to another buyer, you are out of luck.  Move on and don't look back.
  • December 24 2013
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Only an attorney can advise you of your legal rights, jo, and your agent should be able to find out how you were bypassed.

All the best,
  • December 24 2013
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Profile picture for Outer Banks N C
Avoid putting time demands in a short sale offer to purchase, these sales take time and you can not push a bank with time demands, it can blow up in your face, as it did to you. There are no first right of refusals unless it specially spells it out in the contract.
  • December 24 2013
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Profile picture for Rebecca Marvel
Wetdawgs is right.  I wouldn't be surprised if the buyer is a family member of the owner of the house or a friend.  This happens a lot -- then the owner gets to stay in the house.

Move on.. find another property.  There's nothing you can do about it.
  • December 24 2013
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Profile picture for wetdawgs
With legal contracts, both parties have to agree to an extension.   Apparently the other party did not in this case.    Your agent should be able to explain more about this with you and if that isn't sufficient please see your attorney about your legal rights.
  • December 24 2013
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