Home Buying in Milford>Question Details

Jkcd55, Home Buyer in Milford, CT

I signed a contract to purchase a condo. The seller did not disclose that this property was a short sale. The seller purchased a second home after

Asked by Jkcd55, Milford, CT Fri Oct 12, 2012

sig The seller purchase and closed on a second home after signing a contract with me. How can she consider her first property to be a short sale, other than she chose to use her money to purchase another home while not satisfying the mortgage on her first home.

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If the short sale is approved, it means that the seller had sufficient reason to move (a job transfer would be considered sufficient reason for instance). Perhaps the seller did not realize that she would be in a short sale situation before making her purchase; if she was not given appropriate information that included the cost of selling, she might not have realized the position she was in. I am sorry for your situation - finding out in the middle of a transaction that it requires approval from the seller's lender is not fun. Working with a professional and experienced Realtor can help you navigate these situations. Good luck with your purchase!
0 votes Thank Flag Link Thu Aug 22, 2013
As long as the seller had enough income to qualify for the purchase of the new home without the sale of the first, then it shouldn't matter. It is still a short sale once the property sells. But since it is after the finalization of the new purchase of the new home it just disqualifies them from buying a new house in the few years following the short sale.
0 votes Thank Flag Link Tue Aug 6, 2013
If the seller had income to qualify for both loans, they could have very well bought another home. However - if this home is indeed a short sale, that needed to be disclosed. The contract you have with the seller is binding whether the short sale is adressed or not...its time to seek a lawyers assistance.
Web Reference: http://www.homesbyminna.com
0 votes Thank Flag Link Mon Oct 15, 2012
Thank you Minna,
I do have an attorney handling this. My daughter is actually buying this.
She is a 22yr old first time home buyer. This should be a happy and proud moment for her. Instead it has been a nightmare.
The seller's agent showed us the condo a couple of times. She seemed professional and very helpful. I did not realize it was not the best idea to use her as my daughter's agent..
The agent did not disclose that this was a short sale. In fact when I contacted her, she denied having knowledge about it. She also stated she did not have much knowledge about short sales. Further calls/ emails normally resulted in "contact your attornery." I have since found out that a signed contract was needed to proceed with the short sale. It was kept quiet until the closing on the second home was completed. Now we will hope for the best.
Flag Mon Oct 15, 2012
Sorry that this happened to you. People can do things we don't understand.
First, the Seller's agent should have researched what was owed on the property. And the Seller should have disclosed the potential for a short sale. I don't know how they managed to purchase with bad credit, maybe its not in their name. In any case you can still purchase the home if that is what you want and possibly for less. You really need a good short sale attorney who knows the rules and works with them all the time.
The only problem for you is timing and if you can and want to wait for the house. If you love it then go for it. If not you can cancel the purchase. Good luck and don't let this stop you from making a purchase. Their may be a better home out there and this was the universe getting you out of the deal.
0 votes Thank Flag Link Fri Oct 12, 2012
Thank you so much.
Unfortunately, I LOVE this condo and at this time I am hoping that things will somehow work out. I am in a position to wait it out.
Flag Fri Oct 12, 2012
You have a choice f the seller did not disclose the property was a short sale,. You can go forward with the purchase and wait to see if the seller's bank approves the short sale or you should be able to walk away and get your deposit back and find another condo.

Please make sure the contract does not include the wording "Subject to Bank Approval" or Subject to Third Party Approval". These words would qualify for dislcosing a short sale. Lots of luck to you and let me know if there is anything else I can answer for you.
0 votes Thank Flag Link Fri Oct 12, 2012
Thank you Stacy,
The contact does state "subject to seller's bank approval of the motgage payoff." My realtor, who is also the seller's realtor states that she was not aware that this was a short sale and she is not that knowledgeable about short sales. My attorney reviewed the contract & did not realize it was a short sale. It was my banker who said I should look into this further because of that statement. It was then that my attorney discovered that this was in fact a short sale. The contract was signed on 7/11/12. The seller has since bought a new home and closed on it.
Flag Fri Oct 12, 2012
If it was not disclosed how do you know it's a short sale? The contract should have stated that the sale is contingent on 3rd party approval, because the lender would have to sign off on the sale as they would be part of the contract. If that is the case, there is no contract until the lender signs off. However if that was not stated on the contract and the seller and buyer are the only parties on the contract, then the contract terms apply, provided the all parties signed. Discuss this with your attorney immediately!
Once again there are reasons to hire a REALTOR folks and involve a real estate attorney, and this is a prime example of why you should.
0 votes Thank Flag Link Fri Oct 12, 2012
I do have a realtor but I used the seller's realtor.
The listing agent showed me the condo, seemed very nice, and professional. I did not realize that it was not in my best interest to do this.
I also did hire a real estate attorney. He reviewed the contract.
There was no mention or concern about a "short sale."
Under terms and conditions: 90 day closing or negotiable,Subject to sellers bank approval of mortagage payoff, and seller finding suitable housing.
It was my banker who said she did not like the wording & thought this should be clarified. It was then that my attorney found out that the seller owed more on the condo than she agreed to sell it for. My realtor claims she had no knowledge of this being a short sale and was "really not that knowledgeable about short sales." Something just seems very wrong!
Flag Fri Oct 12, 2012
Why do you think it was a short sale? A seller can sell a property for less thatn the note. they still may bring money to the table and satisfy the mortgage.
0 votes Thank Flag Link Fri Oct 12, 2012
I have a friend who did sell her home for less than she owed but did bring a check to closing. This is not the intention of the seller in this instance.
My attorney is telling me he does not have a good feeling about this even though the seller's attorney sent info that he is anticiapting an October 25th closing date.
My attorney stated he feels this is a "made up date."
Flag Fri Oct 12, 2012
My attorney has notified me 2 months after we signed the contracts that the property is a short sale. The seller did not disclose anything about a possible short sale.
There was nothing in the contract.
The seller paid $267.00 for the condo. Her original mortagage was $200,000, five years ago. She took a second mortagage of $ 60,000. The condo was recently appraised at $205,000. I am (hopefully) purchasing it for $ 195,000. BUT she purchase a new home and closed on it three weeks ago. I am not sure but I am thinking she may have used the $60,000 for a down payment on her new home.
Flag Fri Oct 12, 2012
You may want to check with your realtor/lawyer on that one. Sometimes the buyer can be taking on the mortgage from the sale. In most cases someone going through a short sale would not qualify to purchase a home or the profit would probably not be enough to put down on one.

The little details are what make a difference in this situation. Either way, the seller cannot "pull a fast one" on someone when it comes to contracts. If a seller neglects to disclose required information that could be a breach of contract.

I can't give you actual advice because there are so many factors involved, you should definitely check with your realtor to make sure everything on your end is good.
0 votes Thank Flag Link Fri Oct 12, 2012
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