Home Buying in Norwood>Question Details

Suz, Home Buyer in Norwood, MA

My offer on a house was accepted & signed P&S. Closing date is 3 weeks away & now, seller says she is underwater & house needs to be

Asked by Suz, Norwood, MA Wed Jun 6, 2012

a shortsale. For whatever reason, this information did not come out during the drafting of the P&S. I love this house. What do I do? I'm frustrated!

Help the community by answering this question:


Hello Suz,

That's certainly is an unpleasant surprise!

The situation looks a little "off".

There are several things you could do/options to consider:

1) You can request a preliminary HUD1 (with the verbal payoff from the seller's mortgage - which the closing attorney should obtain - I'm not sure I can trust the seller much to obtain it for you at this point). Payoff letter (estoppel) costs money, and seller can obtain a verbal payoff amount for free.
If you want to save money and trust the seller - a verbal will do at this point.

2) In the preliminary HUD1 you'll see how much the seller is under water - if at all.
This way you'll find out if this is a case of a short sale or the seller wants to be paid some "relocation assistance" money - either by you or the bank (some short sale lenders pay sellers, and a considerable amount).

3) Then - it'll be up to you to decide if you want to pay the seller (to make sure you buy at today's lower price - as banks could come up with a higher counter during short sale). Or, you could ask the listing agent to pitch in (your agent didn't cause this issue, so should not be paying). Last option - both agent(s) and you pitch in to get the house purchased/sold.

All things can be negotiated...But, if not - I feel that while the law may be on your side, the seller may have nothing as far as assets (in hardship) - and so the seller will be "judgment proof"...

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
0 votes Thank Flag Link Wed Jun 6, 2012
You do have a legal and binding contract. The problem is they will not be able to deliever a good clean title if they can not get a release of the mortgages and any liens on the property if they don't have the money to do so.

I suggest you speak with your attorney and see what the ramifications are of the seller not proceeding as they have agreed and what rights you have$$$$$

Some options to proceed

A possible option is to determine the amount needed to get the releases needed and pay them off. But that means you will be paying more for the property. Is it worth more in the market place? Is it worth more to you?

The other option is to go through the short sale process.

Last option to find another home.

0 votes Thank Flag Link Wed Jun 6, 2012
If you are flexible in your time-line, a short sale may not be as bad as you anticipate. First of all, I would ascertain who the seller's lien holders are, how many liens are on the property and whether the seller qualifies or a short sale. Most lenders require some type of financial hardship. If the seller qualifies and has only one lien holder, you can get a short sale approved rather quickly. An experienced short sale negotiator should be able to obtain a short sale approval in 45-60 days. If the seller has multiple liens, you will need to obtain approval from each lien holder which could slightly delay the process. Good luck!

Andrew Coppo
Greater Boston Short Sales, LLC
0 votes Thank Flag Link Wed Jun 6, 2012
It's quite possible at the beginning of the listing it was not a short sale, however, as the listing aged, and the list agent dropped the price the homeowner ended up in a short sale. You have to ask yourself if you're willing for the bank to make a decision on whether or not they will accept a short payoff or move on. How much do you love this house? If you love it and want it you'll wait, and if not, you move on. There are no guarantees in short sales.

On the flip side, if the list agent knew the homeowner was underwater ahead of time that should have been disclosed up front.

Good luck.
0 votes Thank Flag Link Wed Jun 6, 2012
For several years, minds better than yours or mine have tried to come up with creative ways to circumvent this; both as a buyer and a seller:

Here's the secret; you got 2 choices;
wait until it goes thru foreclosure, and buy it as an REO,
walk away and find another house.

good luck and may God bless
0 votes Thank Flag Link Wed Jun 6, 2012
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