There’s always something to howl about.

Arizona Short Sales: Who Are You Working For?

I, like some of you, have just received the AAR’s May newsletter, in which Christopher A. Combs, AAR’s “legal hotline” counsel, provides a legal treatise on a contractual issue regarding short sales in Arizona.  I direct your attention to Exhibit A (page 11, dab-smack in the middle of the page). 

In this article, Mr. Combs Esq. indicates that a “short seller” can accept as many offers as they can possibly get for their home, but that only the first one is “active,” will all subsequent offers being in a “back-up” position. 

Now, to me, what this means is that the first offer I get is the “active offer,” and only that offer can be sent to the lender. Any subsequent offers will be on hold, unless, and until, something goes wrong with the first offer.  If the buyer flakes out, or the lender rejects the first offer, we then send them our “next in line,” and hope for the best.

The way I see it, this is a clear breach of my fiduciary duty to my client. My duty is to sell the client’s property. Now, because of the nature of a short sale, my client, in fact, has very little to do with the process. He could care less how much I sell his property for, as he really has no control over whether it sells or not. Is it not in the best interest of my client to “accept” any and all offers, as they come in, and submit them to the lender, and let the lender decide which one, if any, they will accept?  By dragging out the process of “oh. . .you don’t like that one? Let me send you this one. . .,” am I not doing even more damage to my client’s credit? Am I not to act in a timely manner, and get the most money for my client’s property as I can, so that we have a greater chance of getting the deal done?

This nonsense from the legal hotline seems to hamstring me while trying to perform my fiduciary duty to my client. The only remedy I can see is to have each and every potential buyer sign an addendum to the contract which essentially states:

“You do not have a legally binding contract with the seller, contrary to you or your realtor’s opinion. Any and all offers will be submitted to the lender, in the order in which they  arrive. Your offer will not be assigned priority or legal positional standing. The lender(s) and the lender(s) alone will determine which, if any, offer they will accept and take to closing.”

 See any other way around this impediment?
Allen