Question Details

Sam, Home Buyer in Fremont, CA

Need advice on a Short Sale Cancellation by seller

Asked by Sam, Fremont, CA Wed Mar 7, 2012

What happens when the seller in a short sale transaction cancels the deal last minute? the escrow is to close in 4 days and the buyer has already given notice to his landlord, packed all his things, ordered new appliances etc. The seller refuses to sign his set of docs and proceed. If this deal does not close, home will be in foreclosure in few days. The Sellers agent says we can take whatever action we want to take against the seller. Buyer has completed inspections, loan, appraisal etc.

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3
Very sorry to hear this Sam. Unfortunately, the answers below are correct. a short-sale is really a Long sale with absolutely NO guarantees it will close on time or ever. If the main lender can't justify the transaction, they will kill the deal and take their chances at foreclosure. If the current owner of the property does not cooperate fully, it also will not close. I had one recently where the owner was distraught to the point of being paralyzed. The transaction died and the house was foreclosed on. As stated below anyone can sue over anything in this great country of ours. Collecting on it is a whole different story.

As difficult as it might be, best to move onto a better opportunity, as there are plenty of them out there. The lenders have no liability and to be honest you would just be wasting your time and money to pursue them further. Perhaps an REO property or property needing work. Many times great opportunities are to be gained in these types of properties. I really hate these kinds of stories, but unfortunately short-sales are a gamble at best for everyone except the lender.

I hope it all works out for you Sam,

Rob
0 votes Thank Flag Link Thu Mar 8, 2012
Sam this happens from time to time. The seller may not have all the details when they get their approval. I have seen sellers get an approval from a second or third leinholder for short sale. When the approval letter comes rolling in their is a stip that the seller/borrower must sign a note for release of lein. Most refuse to do so. The sale can not proceed without all leins being released so the sale has to be cancelled.

The buyer can go after the seller for damages. The Realtors® can go after the seller for commissions. By the way the next door neighbor can go after the seller just becasuse. You can sue some for just about anything but getting the money is the hard part.

If you do it soon enough you could lein the property with the judgement from your court case and watch the lein be set aside in forclosure.
0 votes Thank Flag Link Thu Mar 8, 2012
It comes with the turf of trying to buy a short sale. Anytime you try to take advantage of someone else’s misfortune the blade can cut both directions. I assume that was what was going on, trying to buy a home for less than the market value. I apologize for my observation if the offer was at market value, but most people do not go to the trouble of buying a short sale and pay full price. If the seller gets squeezed beyond the breaking point there is no reason for them to co-operate with the buyer or the bank.
0 votes Thank Flag Link Thu Mar 8, 2012
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