Can short sale sellers who have already accepted an offer and signed an agreement of sale, accept another offer?

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Can short sale sellers who have already accepted an offer and signed an agreement of sale, accept another offer?

My husband and I made an offer on a short sale in Pennsylvania on 9/13/17. The sellers accepted the offer and signed the agreement of sale and short sale addendum on 9/14/17. As our realtor explains it, they then submitted our offer to their bank for bank approval, which weve been waiting on since. In the meantime, weve applied for our VA mortgage, and the application has been accepted by our bank. Yesterday, our realtor contacted us and said the sellers have received an offer for 5,000 higher with conventional financing, and they want us to come back with our highest and best offer and drop our VA mortgage for a conventional mortgage. My husband and I feel it’s impermissible for them to consider another offer when they’ve already signed ours, submitted it to their bank and we’ve been waiting nearly a month for their banks approval. Our realtor says our signed Agreement of Sale means virtually nothing because the bank hasnt accepted yet. Which is true? What should we do?

Asked on October 7, 2017 under Real Estate Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You write that part of the contract was the "short sale addendum." While the exact language of this addendum may vary (there is no one single form), the crux of the typical short sale addendum is that the sale is contingent on bank approval: the seller does not need to go through with the sale if his bank does not agree to it or  if the bank will require the seller to contribute his own money out of pocket to the deal as well. Therefore, while you should review the terms of the specific addendum you signed, as a general matter, unlike a non-short sale, the contract in this case would not yet be binding until and unless there is bank approval.


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