Can Multiple Offers be Submitted on a Short Sale?

If you’re new to the world of real estate, you might have questions about short sales. A short sale happens when a property is sold for less than what is owed on the mortgage. Common questions include how short sales work, what the impact is on a seller’s credit, and whether buyers can get a good deal. These are all very good questions, most of which are answered in our Short Sale Series | Buying a Short Sale. However, one popular question that is not answered is “Can multiple offers be submitted on a short sale?” so let’s answer that now!

Debunking Short Sale Misconceptions

One of the biggest misconceptions about short sales is the seller has little to no say in the process, which is completely false. While the seller may owe more than their home is worth and can’t sell without the lienholder’s approval they still own the home. So a buyer will be negotiating with the seller, not the seller’s lienholder(s). In fact, outside of needing 3 party approval short sales aren’t much different than a traditional sale.

To buy and sell real estate, regardless if it’s a short sale or bank-owned home, a buyer and seller need to agree to all terms in writing for the sale to be enforceable. Now can buyers and sellers verbally negotiate and agree on terms? Absolutely, but verbal agreements are not binding, so unless it’s in writing and signed by all parties it’s meaningless. This is why sellers can verbally negotiate with multiple buyers at the same time as long as they don’t sign anything.

Another big short sale misconception is that price doesn’t matter, it 100% matters, especially to the lienholder who is trying to recoup as much money as possible. Just because a seller is short selling their home doesn’t mean they should accept any offer that comes along. Sellers need to care and try to obtain market value for their homes.

Lienholders will perform a BPO, which is similar to a home appraisal, to determine the true market value of a property. So if a seller were to accept an offer well below market value it could be a surefire way to receive short sale denial. Not only are they more likely to receive denial accepting a low offer they could also be one step closer to foreclosure if they stopped paying their mortgage.

So the best chance of a seller receiving short sale approval is to successfully negotiate a short sale offer that has strong realistic terms. It’s also imperative they hire an experienced short sale team who knows how to successfully get short sales approved.

Can Multiple Offers Be Submitted on a Short Sale?

While multiple offers can be presented to a short sale seller they cannot accept multiple offers nor can they submit multiple signed/unsigned offers to their lienholder. Not only will that muddy the waters it will delay the entire process.

So the answer is no, multiple offers cannot be submitted on a short sale. After all, the seller only has one home to sell.

What Type of Offer Should a Short Sale Seller Accept?

The likelihood of the lienholder approving a short sale increases when the seller accepts the strongest offer possible. So what type of offer should a short sale seller consider?

1. Strong Offer: A short sale seller should consider a strong offer, which includes a price at market value along with strong secondary terms. Large escrow deposit, a limited number of contingencies, short contingency periods, and a quick closing date if approval is received.

2. Strong Buyer:  Short sale approvals, or denials, can take months to receive, there is no set timeframe. So if the lienholder approves the short sale the approval itself is only good for a certain amount of time, the norm is 30 days. This means the buyer has 30 days to have an inspection, appraisal, obtain financing, if necessary, and close.

So the short sale seller needs to find a buyer who is qualified, patient enough to wait for the lienholder’s decision, and ready to take prompt action and successfully close if approval is granted.

Final Thoughts

Having a clear understanding of the short sale process is crucial when navigating the real estate market. By addressing common questions ahead of time all parties will have a better understanding of the entire process and can set expectations accordingly. Remember, informed decisions can lead to successful transactions when it comes to buying or selling real estate.

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Popular Multiple Offer Questions 

• Should I submit an offer on a short sale? Whether or not you should submit an offer on a short sale will depend on your individual circumstances. It’s important to understand the short sale process, the possible outcomes and set your expectations accordingly. You could wait 6 months and the short sale could be denied. You could wait 60 days and the short sale could be approved. So it’s important to make an informed decision if you decide to pursue buying a short sale property.
• Can there be multiple offers on a short sale? Yes, multiple offers from multiple buyers can be submitted on a short sale. A seller isn’t required to accept the first offer they receive. The reality is the seller doesn’t have to accept any offers, it’s their home their decision. However, if they decide to accept an offer they can only accept one offer in writing.
• Can a seller send multiple counter offers? Yes, a seller can absolutely counter multiple offers at the same time. Whether or not they can do so in writing will depend on their state laws. Some states may have a multiple counter addendum while others do not. It’s important for a seller to discuss their options and obligations with their Realtor prior to countering multiple offers.
• Can you put in multiple offers at the same time? Yes, home buyers can submit offers on more than one property at the same time, even if they only plan on purchasing one property. However, there are ethical considerations for buyers to keep in mind when “throwing out” multiple offers.
• Can a seller negotiate multiple offers? Yes, a seller is free to negotiate with multiple offers at the same time. By doing so they will most likely be able to secure the strongest possible offer. However, they only have one home to sell, so they can only accept one offer in writing.

About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “Can Multiple Offers be Submitted on a Short Sale?”

Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell, or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.

Can Multiple Offers be Submitted on a Short Sale?