House under contract showed up on auction site

[Shane Ward]

I have a property under contract that is a short sale and just saw it pop up to be auctioned off. I first saw it on Trulia then Auction.com. My realtor told me that they can’t do that, it is a breach of contract but it’s still there. Should I be worried that it might get sold out from under me?

[Salvatore Trapani]

I have to disagree with Minna. The lender is not 'powerless' in a short sale. They absolutely hold ALL the power. They are under no obligation to approve a short sale and therefore can and will proceed with the auction/foreclosure if they don't agree to the terms and offer.

A seller and buyer being under contract on a short sale transaction does not eliminate a potential foreclosure action. It may postpone the process while it's under review.

A foreclosure auction cannot be superceded by an executed contract.

If you do not receive an approved short sale from the lender and do not close and submit all documents and funds to said lender prior to the auction date, you'll probably be out of luck.

Typically a lender will postpone (or remove) a scheduled foreclosure sales date (auction) if there's an active approved short sale.