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Contract Acceptance

The short-sale contact is signed by the buyer and the seller--not by the lender. The lender only approves the contract. The approval by the lender is an additional contingency, like a home inspection, mortgage approval, etc., and should be treated as you would treat any other contingency.


  • Either party could back out without penalty if the offer is not signed.
  • There is no contract until it is signed by the buyer and the seller.
  • The fact that the seller accepts the contract contingent on bank approval does not guarantee bank approval and therefore does not guarantee the buyer will actually be able to purchase the property.

Subsequent Offers

If the agreement between the buyer and the seller allows the seller the opportunity to continue to market their property, the listing agent must submit all offers to the seller until closing--whether or not they are "better" than the first. Any subsequent contracts accepted by the seller must be made "subject to release of prior contract." MLS rules and the Code of Ethics require that the listing agent disclose the existence of an accepted contract, including those with unresolved contingencies, to any broker seeking cooperation.

If the lender is adhereing to the FHA Preforeclosure or HAFA program, there should be no foreclosure moving forward during the short-sale approval time. However, if the seller is close to foreclosure and the lender is not following the guidelines, the second contract could nullify any progress made on the first and put the entire approval process back to square one.

The listing agent should attempt to determine the lender's protocol on subsequent offers. Some will do this at the time of initial contact with the Loss Mitigation Department, most likely during the submitting of the short-sale package to the lender.