In an ordinary multiple offer situation, the seller alone has control of the situation and can make up their own mind about the wisdom of pursuing better offers. In a short sale situation, however, the seller is also negotiating with the lender over modification of the mortgage or note. The seller, depending on the exact situation, may or may not be liable for any deficiency should the lender end up foreclosing. See the Foreclosure section of this topic for an explanation of deficiency judgments under Oregon foreclosure statutes. The seller may or may not suffer tax consequences based on the amount of debt forgiven. The size of the deficiency can also affect the seller’s credit rating. All of this suggests the lender’s and seller’s interests in obtaining the best possible offer coincide and sellers should accept and forward for consideration better offers if they are made. Paragraph #5 of the short sale addendum reflects this conventional view of short sales.
The problem is that in real life the interests of the lender, the seller and multiple buyers can, and do, conflict in ways that make deciding what to do about subsequent offers in a short sale situation very difficult. This difficulty can make it very hard for an agent to serve their client’s interests and avoid risk. Take, for example, something as simple as an escalator clause in a short sale.
Back to Top