Bank made counter offer!!!!!

fishdelasolApril 2, 2008

Ok, so after a week of nail biting and waiting to hear from the bank...we finally did! We offered the asking price (249K) with 6% back towards closing. They countered with $255 with 6% back and another $2000 (total $3000) deposit to be held until closing.

We are happy because that was going to be our max offer, but the whole idea of having $3000 out there is scary! We lose it if anything goes wrong....

We've been turned down and started over so many times with house hunting. Now I'm freaked out about moving on to the next part of this whole house buying thing!!!

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cordovamom

congrats and enjoy the journey....I hope you put inspection, financing and appraisal contingencies in the contract. Those should help to protect that earnest money, then you'll only lose that money if you back out for other reasons then financing, appraisal or inspection. Good luck!

    Bookmark   April 2, 2008 at 2:11PM
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triciae

Congratulations!

/tricia

    Bookmark   April 2, 2008 at 3:56PM
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fishdelasol

Sigh. We accepted the banks counter offer, got our paperwork in within a couple hours. Then, the bank responds that another offer was made and we needed our best offer in last Monday. On Wednesday, we find out that we didn't get the house...

Today the house is still listed as Active-Available. Our agent calls to inquire and is told that the house is still on the market!!!!! We are resubmitting our paperwork, but this is SO frustrating...I don't understand what is going on! Just sell us the house...it will be off their books and we aren't that far off from asking price. We accepted their counter offer, so I don't understand what the deal is. We can close fast, too. GRR!

    Bookmark   April 14, 2008 at 2:23PM
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mfbenson

"We accepted the banks counter offer, got our paperwork in within a couple hours. Then, the bank responds that another offer was made and we needed our best offer in last Monday."

If you accepted their counter offer then that is final, regardless of any other offers made to the bank. Tough luck for them, and if they aren't willing to sell it at the price you agreed to you need to get an attorney to mention "specific performance" to them...

    Bookmark   April 14, 2008 at 3:59PM
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feedingfrenzy

Did you accept the counter offer within the time limit it stated? If so, you have a contract with the bank. The bank isn't free to accept any other offers during the time its counter offer to you is open.

I agree with mfbenson. Get a lawyer on this pronto!

    Bookmark   April 14, 2008 at 9:20PM
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reno_fan

Banks don't always play fair. Even if you got the paperwork in, if they didn't "receive" it in the proper department/get the final stamp of approval, they consider the property to be open to any and all offers.

I had the same thing happen with a couple that was buying an REO. We had a signed contract, yet one final department hadn't signed off on it, so they kept it "active" for bidding. A higher offer came in and they got the house.

    Bookmark   April 15, 2008 at 8:30AM
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feedingfrenzy

As I said, if a party makes a counter offer, it's not free to accept other offers as long as the counter offer remains open -- ie, until it expires. Unless the counter offer specifies some form of direct delivery, it is considered to be accepted when received by the party that made the counter offer -- ie, received at the bank's address. Whether or not it has gotten to a particular department or been stamped by a particular employee is irrelevant from a legal standpoint.

Offer and acceptance makes a binding contract. So does counter offer and acceptance. A bank that pretends it isn't in a binding contract because it prefers to enter into an illegal, but more lucrative contract, may try all kinds of tricks to cover up what it's doing. If the OP wants the house badly enough, it's up to him/her to call the bank's bluff.

    Bookmark   April 15, 2008 at 9:51AM
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reno_fan

Legal and ethical or not, that's often how it plays out. Not that it's right, it's just how I've seen deals done.

Unfortunately the burden of proof falls on the buyers. The bank is pretty good at giving the runaround, and buyers get worn out from the process. I think they count on this, and count on no one calling their bluff.

It's a mess, I tell ya.

    Bookmark   April 15, 2008 at 10:47AM
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fishdelasol

Good to know this now....

As of yesterday, the bank's agent told my agent the house is available and on the market. If we are interested we should make another offer. At this point we have resubmitted our offer and included their counter offer paperwork. The time period is long gone for the counter offer. We just included it to remind them of their action.

What I don't understand is why do all of this with a counter offer in the first place if they don't want to get rid of the house? Is there any reason they would want to hold onto the house? Why wouldn't they contact us if the other higher bidder went bad?

Why does buying a house have to be so hard? I hate it.

    Bookmark   April 15, 2008 at 11:20AM
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terriks

As I said, if a party makes a counter offer, it's not free to accept other offers as long as the counter offer remains open -- ie, until it expires.

Actually, if the party that makes the offer or counteroffer can withdraw the offer before it is accepted.

    Bookmark   April 15, 2008 at 3:22PM
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feedingfrenzy

If it's been withdrawn, then it's not "open."

Obviously.

    Bookmark   April 15, 2008 at 5:03PM
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feedingfrenzy

reno fan

I'm curious. What do you tell your clients in this situation? Do you inform them that they have a binding contract with the bank which the bank has illegally chosen to ignore? Do you advise them that they could consider retaining an attorney to help them enforce their rights?

    Bookmark   April 15, 2008 at 5:24PM
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reno_fan

What do you tell your clients in this situation? Do you inform them that they have a binding contract with the bank which the bank has illegally chosen to ignore? Do you advise them that they could consider retaining an attorney to help them enforce their rights?

It depends on whether or not they *do* have a binding contract. In our area, REOs and short sales have a special provision in the MLS. If it's listed in the MLS as a "Special Provisions Affecting Sale", and it says either "Corporate Approval Required" or "Lender Approval Required", then we know that it's *not* an executable and enforceable contract until we have a signed acceptance from the lender.

You could have a case where the REO manager or short sale manager says a contract is approved, the buyer signs it, but if that offer does not have the corporate/lender approval letter with it, then it's not enforceable.

The banks here even make all offerors sign a form that says that they're under no obligation to take any one offer over another, they reserve the sole right to work with any party they choose, etc.

I've been on both sides of this, and it just plain stinks for everyone. The banks can change their minds up until the point they offer that final approval, and they can do that because they state it right from the beginning.

We happen to be in one of the few areas that actually has a very strong housing market, so for most buyers, it's just not worth the hassle. They'd rather just move on down the street to a house that won't have so much red tape.

    Bookmark   April 16, 2008 at 6:40AM
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galore2112

"The banks can change their minds up until the point they offer that final approval, and they can do that because they state it right from the beginning."

Not just banks, every seller can do this, as long as the seller puts this out clause in the contract and the buyer accepts it.

Individual sellers don't do this because they typically don't write their own contract to their own favor and are more motivated than an anonymous bank entity to sell.

    Bookmark   April 16, 2008 at 8:57AM
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feedingfrenzy

reno fan

You're talking about a different set of facts: a situation where the BUYER has made the offer and the bank requires special approval to create a binding contract. That's NOT the situation here.

The bank countered the OP's offer to purchase. That counteroffer is treated at law exactly like any other offer and puts the bank in the position of the offeror. It is the buyer (the OP) who is in the position to accept or reject the offer, not the bank. Once the buyer's acceptance is received at whatever address is specified in the counteroffer, then a binding contract exists.

    Bookmark   April 16, 2008 at 10:35AM
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reno_fan

No, I think I am talking about similar circumstances. Again, all banks are different, but many have the "special provisions" CYA clause that allows them to gather and work as many offers as they like and accept the best one in their favor.

If this bank is similar to ones I've dealt with, then the bank's counteroffer to the buyer may be conditional. They may have an account manager authorized to deal with a buyer, but any and all final contracts must have an accompanying final approval letter before it's considered "under contract."

Again, it depends on the bank, and it depends on their practices.

In this situation, even though the buyer has accepted the counter offer, if there is a "final approval" provision, then it's it's not official until that approval is attached to and made a part of the contract. The catch is whether or not the OP has any such provision and was made aware of it. If that bank does not have that provision, then yes, the OP could have legal recourse. If that bank has the provision, then it's at their sole discretion how they finalize and accept contracts.

I had a deal where the bank had a rep authorized to "accept" offers. The rep, in turn, had to submit any contracts to the head department for final approval. The bank rep countered the buyer, the buyer agreed and signed the counter, but it was "pending final approval". In a normal RE transaction, this would have made the house go "under contract", as both buyer and seller had signed. But because of the special provision of "Pending final approval", it was NOT fully executable, even though both parties had signed. We still had to have an accompanying approval letter from the bank. Well, long story short, while waiting on the bank's letter, another offer came in and the first buyers lost out.

I don't mean to be argumentative, I just know first-hand how some of these bank word their listings. Often you can't even submit an offer without signing lengthy documents stating their policies on this type of thing.

    Bookmark   April 16, 2008 at 10:54AM
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reno_fan

Ack. Hit send before I was done.

I'd love to see any of the disclosures and addenda (if any) that the bank gave to the OP. It would clear up a lot of questions.

    Bookmark   April 16, 2008 at 10:57AM
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fishdelasol

Reno fan,

We did sign an Addendum. It said that the bank can accept offers from anyone and it is not a first come, first serve basis.

I am not sure if that meant that they could accept offers from anyone at anytime (regarding our counter offer time frame). They counter offered, we accepted and turned in our paperwork within their time frame.

Between the time we submitted our acceptance and awaiting their signed contract they said another offer had been submitted. A few days later, we found out we did not get the house....A week later, the house is still on the market and we have resubmitted our acceptance of the counter offer and are awaiting a response.

    Bookmark   April 16, 2008 at 11:07AM
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reno_fan

Fish, that is *so* frustrating! Did your Realtor or theirs mention any verbiage about "lender approval required" or "corporate approval required"? That could indicate if they too operate in the "final approval stamp needed before it's official" mode. It makes you just want to scream, doesn't it?

I spoke w/another realtor who was handling a sale like this. She told me how angry she was because she listed an REO, got mutliple offers the first day, accepted one of them (conditionally, of course) and then the bank tells her, "Oh, we want the house back on the market for a minimum of 7 more days." So she had to put it back "active", take even more multiple offers, and the first people lost out.

I feel for you. And I hope that when the dust settles you get the house.

    Bookmark   April 16, 2008 at 11:23AM
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feedingfrenzy

An offer (or counteroffer) can be conditional upon a subsequent act (final approval, for example), but the offer must clearly state that.

An addendum to the bank's counteroffer that merely says "the bank is free to accept offers from anyone" does not clearly state that final approval is required. What it means is that the counteroffer does not prevent the bank from accepting another offer, and that's something quite different. The bank can accept another offer but only up and until the buyer accepts the counteroffer because that act creates a legal contract between the parties. At that point, the bank can no longer accept another offer.

I don't mean to be argumentative either. Without seeing all the documents, it's not possible to know whether there's a binding contract or not. But I don't think it's a good idea just to assume that the bank has covered all the bases without running everything by a lawyer.

After all, we know from the forum that some banks are trying to foreclose on houses when they have no documentary proof that they own the mortgage. That's a lot bigger bluff than anything that may be going on here.

    Bookmark   April 16, 2008 at 2:30PM
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reno_fan

FF, I agree. That's why I'm curious what (if any) verbiage there was about such conditions regarding lender approval when the initial offer was made, before the bank countered and the OP accepted.

I had a couple in my office yesterday writing an offer on a bank owned home. We had to sign 3 full sheets of disclosures and addenda that outlined and specified how the bank works. It's daunting to say the least. In our area, trying for bank owned homes only seems to benefit those who aren't pressed for time, have money and patience, and who won't be terribly upset if they lose the house.

    Bookmark   April 16, 2008 at 2:42PM
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fishdelasol

We did have to include our lender's approval letter and a few other documents say that we are approved for the mortgage. I don't know every detail anymore from signing and filling out all the papers again. It is a bit of a blur.

I just don't get why banks don't seem to want to get rid of these houses....I want to buy a house that is just sitting empty on someone's books. What's the deal?! This isn't the first house that has fallen through due to bank issues.

    Bookmark   April 17, 2008 at 9:36AM
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reno_fan

Fish, I totally feel your frustration. It's disorganized chaos at best, isn't it? It's equally frustrating for the realtors. The listing realtors have to list those houses with a special set of rules. The buyer's realtors have to do extra work as well, and all parties involved become a "prisoner of hope" while waiting on that final approval.

Sidenote, when I'm talking about "lender approval required", I'm not referring to the buyer's (your)lender, but rather the lender that owns the house. Most REO's require the buyer to submit proof of funds with their offer, but when they stipulate "Lender approval required" or "Corporate approval required", that's their way of saying they get to give the final stamp of acceptance on any/all offers.

    Bookmark   April 17, 2008 at 9:57AM
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fishdelasol

Yea..I know it must be so frustrating to everyone involved. Our agent has been great about explaining everything to us. This one had her a bit stumped though as to why they didn't get back to her when the other deal fell through.

I cannot recall about the lender approval clause. I would have to guess that they have it in there.

    Bookmark   April 17, 2008 at 11:28AM
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dsajdak_hotmail_com

Is it better to resubmit a rejected offer or is it okay to just write an addendum to the previous offer? We made an offer on an REO that the bank rejected. Our agent tells us we can just write an addendum, but I want to make sure we do the best thing.

    Bookmark   April 19, 2008 at 8:42PM
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brickeyee

If you want the property lawyer up.
A lis pendans is likely to quickly get the banks attention.

You need an attorney to review EXACTLY what the contract language is.
Banks rarely have the best and brightest RE attorneys and routinely make all sorts of boneheaded mistakes.

While the bank might like to 'reserve it rights', there are whole sections of the law dealing with the timing of accepting and rejecting contracts.
Even if the bank claims to have inserted verbiage about accepting other offers, you may not be bound by that since NO CONTRACT exists until you sign the contract, and at that point if you have not made any changes the contract becomes valid.

    Bookmark   April 20, 2008 at 1:26PM
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feedingfrenzy

I completely agree with brickeyee. As I've been saying all along, it's foolish to just assume that the bank's lawyers know what they're doing. You would be amazed at some of the unclear, ineffective, and just plain stupid language I've seen in contracts drafted by other lawyers, some of them employed at supposedly high-powered firms.

You'd also be surprised how differently the bank might act once they know their dealing with a lawyer who can see through their snow job, if that's what it is.

Please don't rely on legal advice, however well meaning, that you get on forums like this one. You simply won't know whether your existing contract with the bank is valid or not until you have a competent lawyer review all the papers. And you need to do this BEFORE you submit another offer because that act may signal your acquiescence that the first contract isn't valid. and prevent you from enforcing it.

    Bookmark   April 21, 2008 at 11:46AM
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fishdelasol

CONCLUSION....

Well, we resubmitted our offer because the REO's agent told my agent the property was still available. It turned out that the bank is still holding on to the other offer made a couple of weeks ago by a different buyer. The haven't signed off on a contract for them either. They are waiting to see if they get a better one.

I am upset and relieved. I am sad because I liked the house. I am happy because I can walk away knowing that I won't get screwed over by this particular bank and their games.

I still don't get what any bank gains by holding onto a house.

    Bookmark   April 21, 2008 at 12:01PM
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