Expert: Dick Dennis - 1/23/2010

Question
Mr. Dennis,

I am involved in what seems to me to be an unusual real estate situation, and while I have the opinion of my buyer's agent on the matter ("we can only wait and hope for the best"), I would like another opinion on the matter.

With the turn in the housing market, my husband and I decided to purchase a small home as an investment property. We immediately found a home we liked, and after looking further, decided to make an offer on the first. It needed considerable work and had been sitting on the market for months, offered as a short sale. Somewhere along the line, we learned that the owners were an unmarried couple with a child who had gone their separate ways and harbored a great deal of animosity towards one another, neither the least bit concerned with the house, it's bills or, apparently, their credit ratings.

When we submitted an offer in October (well below the asking price, hoping our stellar financial credentials would help lead to a sale), we learned that we were a bit late, and another buyer had contracted on it just before. We agreed to be a backup offer.

In December, we learned that the buyers who had submitted the offer before us were likely to withdraw their offer. Two weeks ago, the listing agent contacted our buyer's agent to confirm that we wished to become the first offer. We did, and he said he would have the sellers sign it. After a week of not receiving a signed copy of the contract, our agent prodded further and was told that yes, we were the first contract and we would soon get our copy.

Given that there are still no guarantees that we will be able to buy this property, we have continued to look at others, though we have yet to find anything else that meets our criteria that wasn't contracted on by the time we were able to evaluate it, increasing our hopes that we will get this one. I check for new listings daily, and this morning was stunned to see the status of the property in question changed back to "active" with the price reduced (though still above our offer). Eventually we learned that the sellers have not yet signed our offer... not because of any objection to our offer since they will receive nothing regardless of the price, but we are told it is because the personal issues between them have grown more rancorous. The listing agent claims that they have stopped returning his calls.

Now, this listing agent has proven difficult to communicate with, requiring our agent to make days of numerous calls, emails, etc. to get him to confirm that he even received our initial offer. When we learned that the other buyers would likely pull out, it was because our agent called to touch base on the matter. At that point she had to send him another copy of our offer because he'd lost the first. After that he grumbled about the amount of our offer. While it wasn't our best offer, we hoped to purchase a bargain and would, if necessary, negotiate somewhat with the bank that must approve the sale. Naturally, our agent did not tell him this. Given all of this, I have to question the listing agent's abilities and perhaps his ethics. I wonder whether the reason for the sellers not signing is the truth, but I have no way of knowing. It may well be the truth. I only share this to complete the picture for you.

What concerns me is that with the property re-listed as active and with a reduced price, it will receive new attention and possibly an offer within days as we have seen happen numerous times. If another offer is received before the sellers sign ours, it will have to be presented to them as well, and there is a good chance it will be higher than ours. We had hoped that if we had to raise our offer it would be through negotiation with the bank, not due to an attempt to outbid another buyer. After all the time we've waited with our contract submitted, it seems unfair, and I'd like to know whether it's just an unlucky punch we have to roll with, or if it is in some way technically unfair... and if so, have we any recourse?

Thank you for bearing with me through this tedious tale. I appreciate your time.

Answer
It is obvious that your agent is not that experienced, especially with short sales. The seller basically has no sayso as to the acceptance of your offer. Yes, they must sign it, but only after their lender has chosen you, or anyone else for that matter, as the buyer. The seller will come away without a dime in the sale of the property. So it is no skin off their nose as to who winds up with the house, especially if there is strife between the husband and wife.

The lenders in short sales are dragging their feet in answering offers these days, especially if the offer is way below the BPO (Broker's Price Opinion). With almost every short sale, lenders are living by what the BPO says the property is worth. The lender hires a real estate broker or agent to do a superficial evaluation of the property and if it turns out that the BPO is above your offer, the lender is going to drag their feet. To put it in another way, they . . . not the sellers . . . are trying to get you to raise your offer.

You need to see if your agent's office manager has another agent within his organization who knows how to handle and work with a short sale. All she could do was to renew the listing because time was running out on the original listing. Remember, the seller really does not have the sayso in this matter without the lender giving approval.

If I was your broker, I would recommend you drop the whole matter and go find another house, especially if you have good credit. You have a good chance of getting what you want because of your good credit. I do wish you well.

Dick Dennis
dixiedee13@aol.com
Please visit my blog at TheRealEstateAnswerGuy@blogspot.com