Expert: Diann Tonnesen - 4/19/2011

Question
We found a house that we really liked and put in an offer right away. The buyers accepted our offer. At first we were told this is a short sale and the bank had to approve the offer. After waiting a couple weeks we now found out that it has to go thru fannie mae now. I've heard that this can take awhile. We are getting antsy. We found out that if somebody else likes the house and puts in a higher offer and they get accepted that we are just sos. The problem: we found a different house now that we really like. We were told we can't make an offer on this other house cause we are already in contract. Is this correct. It just doesn't seem fair that we can get bumped any day from the first house and can't do anything about it but we can't go out and make an offer on a different house. Can you tell me if this is right??

Answer
Hi Brie,

Short sales are no fun! They take a lot of patience, and you never know until you get a final bank approval if you really have a home. Whether or not you can make an offer on another home while you are still in an active contract may depend on your local laws, and you would need to consult a local attorney to find out what rights you have in that regard.

That being said, you can usually get out of a contract if you are willing to forfeit your earnest deposit. It may not be necessary to forfeit the earnest deposit, but that depends on the terms in your contract. Most short sale contracts specify that the buyer's due diligence does not start until the bank gives an approval. If your due diligence period after bank approval includes the right to have an inspection and is contingent upon your approval of the inspection report, that could be a possible out. If you are getting a loan and the offer is subject to a satisfactory appraisal, that could also be a possible out if the property does not appraise for the sales price. A third possibility is if the community has CCRs (rules and regulations) and that your offer is subject to your approval of those CCRs.

You would need to confer with your real estate agent to see if any of the above possibilities apply to you. If they do, your agent may be able to go to the listing agent and let the agent know that you are going to cancel anyway once your due diligence starts. The listing agent and seller may be willing to cancel the deal without you forfeiting the earnest deposit rather than lose time on the market prior to a foreclosure, but that will be up to the seller ultimately. Do you have a good relationship with your agent? If you are not sure the information you are getting from your agent is accurate, again, I would consult with an attorney.

Hope this helps a little bit and at least gives you some avenues to explore!