Eventually I was told pretty much what Jeff said. They lowered the listing price so the bank would be more likely to accept the offer, though supposedly they put in the offer back at the beginning of May so dropping the price now still seems strange.
I know my question had some conflicting information about the Short sale/ Repo and I have gotten some as well. It was listed as a short sale. However, we couldn't get into it the first day we wanted to look at it because the bank had changed the locks, so we thought they officially had posession now. It seems like a lot of hassle, but based on all the rest that we've seen in our price range, it was a great deal...
C'est la vie.
You have received great advice. I will echo it with a bit added. First, though, let me say that as far as the price going down with a pending offer already accepted, that makes little sense. With a short sale, the seller is asking the bank to allow him to take less for the property than he is owed. First, the seller accepts the offer, then, the offer is sent to the current mortgage holder. They review the offer, do some research and decide if they would prefer to take the hit and get some of their investment back now by signing off on the deal. The only thing that would make any sense is if the realtor felt like it would look better to the seller's mortgage company if the offer was closer to the listing price, so they lowered the price before submitting to the bank. If you know the name of the realtor, I can try to find out for you. I know a lot of the realtors in the area and can probably get the answer.
On to the other topics. Generally, there are 2 ways you can get out of a deal without losing your deposit- especially in a case like this. First, though, you need to get into the deal. You have to get the offer in and it must have 2 contingencies. The first is that you have a period of time to inspect the property. This is usually 7-10 days. If you find a problem, you don't have to explain yourself, you only have to state it failed the inspection. Secondly, you will have a financing contingency that allows you out of the deal if your financing is denied. Now, if something is missed during the inspection period and is a problem, such as a basement leak, your financing could be denied if it isn't fixed. In that case, you simply get a letter from the lender stating your financing was denied due to the property be in sub-standard condition.
Hope this helps. Email me if you want me to check into the details of that property for you: email@example.com
Your question has come contradictions: either the sale is a short sale or a foreclosure (meaning the bank has title to the property).
I do not work in MI, however I assume that the purchase contract has an inspection period. You sound like first time buyers, so you should go over the purchase contract with your Realtor and make sure that you understand how the process of inspections and contingencies works.
The short answer is that you as the buyer have legal protections to inspect and make sure that the property is worth the price negotiated. It is quite common for homes to have what we call "deferred maintenance". it is also common to have a professional inspection reveal problems with the property. That report is used as a negotiating tool (because you can give the selling side a copy to show them what the inspector reported).
Then either the seller makes repairs needed (and sometimes the underwriter of the loan will REQUIRE certain things be fixed in order to approve the loan) or the seller may opt to provide you with a credit , resulting in a lower price, and then you can make the repairs yourself.
It sounds to me like you have not made an offer yet. That sounds unfortunate because if the first offer is higher, then the best you can do is be a back up offer.
Depending upon the type of sale (short sale or foreclosure sale), being a back up offer may work to your benefit if you have patience.
Be sure to read the article on appraisals (see link). If it is a short sale, the process can take so long that the value of the property may fall, and/or the appraisal may come in lower than the agreed upon purchase price.
Great question and the simple answer is there is no real reason to do that on either a short sale or a foreclosure IF they have an accepted offer and are waiting for approvals. Price change would indicate willingness to consider other offers.
It's also unclear from your question whether you had the home inspected. It sounds as if you didn't.
If the house is still listed--whether it's a short sale or foreclosure--then you can still make an offer on it. If the price was dropped, that suggests that the previous offer may no longer be on the table--either rejected by the seller or withdrawn by the would-be buyer.
It's pretty common for lenders to drop the price if a property isn't selling. And it'd be understandable, in a short sale situation, if the sellers did so, too. In either scenario, the owner wants to sell the property. If it's not selling at the higher price, then you drop the price.
Check with your Realtor. One scenario to consider is to have the basement leak looked at. Then make an offer. Look: What's the worst that can happen? Your offer won't be accepted. Either that, or just walk away and forget about it. But either act, or move on.
Hope that helps.
To get the correct answer , have your agent contact the listing agent and ask.