Jazzy, all I do everyday is Short Sales from the listing side so I have a pretty good idea of what is happening.
1) When a lender accepts your offer that means the investor is going to accept your purchase agreement. THEY HAVE AGREED TO PRICE ONLY. Then typically it is off to the underwriters and within 2-3weeks you get a official "payoff" from the lender that the short sale is approved.
2) HOWEVER, you need to understand the second part to the equation is TERMS between seller and their lender. In this scenario the lender agreed to price but is not willing to agree to terms unless an unsecured note is signed. Most of the time the seller SHOULD KNOW AHEAD of time if the lender is going to ask for a promissary note of the remaining balance BEFORE A FORMAL PAYOFF IS WRITTEN. I have had it happen both ways though so I am not shocked by this. TYPICALLY IN PRE-FORECLOSURE I see this more.
2) the "verbiage" part just means that in the formal payoff from the lender they are stating the terms which they wil agree to the short sale AND YES THE SELLER HAS EVERY RIGHT TO ASK YOU TO CONTRIBUTE. I honestly am thrown for a loop on why your agent won't send you the payoff letter.
Now hey Jazzy it sounds like your REAL QUESTION is whether you should walk away from this property? It says home buying in Minneapolis so if you are indeed purchasing a Short Sale in the state of Minnesota then you should absolutley not walk away if you really love this house and believe you are getting a fair price. Our state laws actually make it very easy to get deficiency judgments waived as long as the agent knows what he is doing. However the competence of the realtors involved will most likley dictate the outcome of this scenario because it is a short sale. Hope it works out for you .....
Direct Home Realty
If there's an "unsecured note", does that mean it's NOT secured against the property? If it is not secured against the property, it is not a lien against the property and, it would seem to me, cannot be demanded on the sale, if it's not a lien on the property. If it's the sellers line of credit having nothing to do with the property, I'd really want someone to tell me why I would have to pay for half of that!
As always, with matters that seem suspect, we recommend you seek legal advice from a short sale attorney who can sort this all out and explain it to you piece by piece in a way you can understand and digest. It will also shed light on who dropped the ball when explaining/disclosing all of this info to you sooner than now! I would start with asking your agent to explain to you the entire chain of events and when they knew about it. If you don't understand, make them explain it again and again and again until it makes sense to you.
Good luck! I know this is tough stuff~
It seems like your realtor is over their head. If you love the property you should fight a little more for it. Ask your realtor's broker to step in and lend a hand (ask the broker if he/she is experienced in short sales). The entire process should be transparent to you i.e. you should have all docs as they are sent.
It sounds like your realtor should have asked for help from his/her company earlier in the process. Good luck!
So sorry to hear you're having issues with your agent on this. It's not out of line to request that the agent's broker get involved just so you can have total transparency on the chain of events. If you know who your agent's broker is, it might be a good idea to make a phone call today and request a meeting in person. It might help clarify things for you and for your agents. Perhaps your agent just isn't saying things in such a way that makes things clear. Do you have a contract for representation with your agent? (not sure how those are worded or constructed in Ohio) If so, it's important to give the agent's company a chance to help you in the way you've hired them to do. Better to try this than to just throw out the baby with the bath water right away.
I don't know how experienced your agent is with short sales or the listing agent either, but you should have a copy of the short sale approval letter. If the agents are not familiar with short sales, then it can be quite easy to overlook the legal verbage that banks put in approval letters.
when I represent short sale sellers, part of the negotiations with the bank is for any deficiency to be waived. You should find out if the listing agent has gone back to the bank to renegotiate the deficiency because the deal could still be saved. Good luck!
If you are aware of what "Recent Sold Comparables", are and feel it is still a good deal then go ahead. If you don't want to pay the extra amount then don't and see what happens. Just remember that it can go either way until everything is singed by BOTH buyer and seller.
It sounds like the bank wants the buyer to sign a promissory note for the deficiency, which is quite common. Most likely what the agent means by "verbiage" in the short sale approval letter is a section that says the short sale is approved on the condition that the seller signs a note to pay the bank back the difference in what they owe versus the net proceeds of the short sale. So if the seller owed $100,000, but the short sale was approved at $80,000, then the bank wants the seller to sign a note for the $20,000 difference and pay it back over a number of years. This is something that the seller and bank are going to have to work out and negotiate themselves, unless you agree to cover the $7500 as the seller has requested. If the bank refuses, there is nothing you can do.
From my short sale sales, I have had this issue come up twice, so there is nothing suspect about it, just another part of short sales.
Kirby Fine Homes
Lic, MN, WI, FL