Another Real Estate Question for you Legal Eagles

[Laurie]

I'm going to contact an attorney on Monday morning, but I wanted to see if anyone had any advice/comments to offer regarding this situation.

I put an offer in on a home a week ago yesterday. It's a short sale, but when I signed the purchase agreement and put my initial deposit/earnest money down the real estate agency I was working with believed that it was already bank owned and well into foreclosure. This meant that my offer was going directly to the bank and I would not be dealing with the seller whatsoever.

This is not the case. Yesterday my agent contacted me saying the seller signed the agreement and is presenting it to the bank for short sale consideration. So far so good.

Today I go to give my agent another $5K to put in escrow towards down/closing etc. and she informs me that there is another contract on the house that was signed by the seller 3 weeks ago. Both contracts will be presented to the bank to see which they will honor or counter offer.

Two contracts/purchase agreements on the same home? Since mine was the second one signed, is it even valid for consideration? Why was it allowed to be presented to the seller and signed if the home was already under contract? Should I turn tail and run, and if I do, can I get my initial deposit back, OR should I just put the other deposit in and hope I come out on top or can get it all back if I don't?

I'm really concerned about the legality of all this. Any comments or specific questions that I should be sure to ask the attorney I contact? Anyone else have experience with short sale situations? Of the homes I've looked at over the last couple of months, easily 90% are short sales or foreclosures, so even if I don't go ahead on this one I'm going to run into this situation again.

Thanks.

 

[TMetzinger]

Definitely talk to a lawyer. The fact that you've gotten these two "surprises" indicates to me that it's probable that either:

1. Your agent didn't perform due diligence to ascertain the status of the property.
2. Somebody's been less than fully honest somewhere.

If you've paid your monies into ESCROW, you should get them back if the deal doesn't close on the terms of the offer. If you paid them into any other sort of arrangement, you may get different results.

Good luck - it's a great time to be investing in things if you've got the ready cash.

This advice is free, and you get what you pay for. Sometimes less.

 

[mikea]

Who did you make the checks for your payments out to?

In my case it was the selling real estate agency. Mine was bank (Fannie Mae) owned when I bought it. It was clear that the money was being applied toward the offer.

I can't imagine any case where you wouldn't get your money back.

Yeah! Talk to a lawyer now.

 

[wsuffa]

Talk to a lawyer. State laws vary on the subject.

In almost every case it is perfectly fine for realtors to accept a backup contract in case the first deal falls through. If first deal falls through, you get your deposit back. If not, you go through with the purchase. But you lose use of your money in the meantime (and generally the acceptance by the seller is "subject to" the first offer).

Generally the realtor has responsibility to present all offers.

It sounds to me like the seller here doesn't have full authority to accept an offer. If that is the case, you'll need to see what state law requires. Most likely, both offers must be presented, but that may not be the case.

Sounds to me like you were not given full disclosure with respect to the sale. If that is the case, you'll need the lawyer to help you out.

 

[lawingr]

It's an echo, but definitely talk to an attorney (which you wisely already said you are doing). There is a WHOLE lot more that goes into it than anyone has yet mentioned . . . ie, what does the actual wording in the purchase agreement say, is not telling you about the bank a "misrepresenation," etc.

Plus, I had to respond since my ID is LegalEagle

 

[Laurie]

Thanks everyone! I appreciate the input.

 

[RogerT]

I put an offer in on a home a week ago yesterday. It's a short sale

Laurie ..

There's a ton of short sales now. I'm a little puzzled that the agent
wouldn't know about another contract. Was the other one actually
accepted by the seller?

Ceil just put in a contract a few days ago on a short sale condo for
her son and his fiancee. She knew there was another contract put
in on it too. They're just waiting to see which one will be accepted.
Since they're already approved for financing they know they can
move quick on it. There's a lot of bargains out there now and
it's a smart move to buy.

I wish I could afford it .. I'd buy something just to get in on
it.

Roger

 

[Skip Miller]

Sounds to me like you were not given full disclosure with respect to the sale. If that is the case, you'll need the lawyer to help you out.

Ditto everything Bill said.

I think it is highly likely your money will be returned promptly if you do not get the house. Particularly if your agent works for an agency that has a state- or nation-wide name.

Your agent may not have been fully candid with you. More probably the problem could be the seller. Foreclosure... this guy is scrambling to do anything and everything he can to make the best out of a bad situation. Lots of incentive to be less than candid as he markets the house.

It's been said before - listen to your lawyer. I don't think there is reason to panic from what you have told us.

Good luck!

-Skip

 

[AdamZ]

Laurie the best advice given was your own. That you seek the advice of Real Estate counsel. something does not smell right at all. Each state is different. I don't know where you are but it will all depend on your local law.

Regarding what Bill said about back up contracts it may be so in your state but is a BIG NO NO where I am. Also ask your attorney about how short sales are conducted in your state.

Oh and make sure your attorney has Real Estate as one of his / her main areas of practice. One should never venture into a real estate transaction without an attorney unless you are very very experienced.

Best of luck.