Home Buying in Canton>Question Details

Pj, Home Buyer in Canton, GA

On a short sale pre-forecloser can the seller (morg. holder) ask for more money after the contract has been

Asked by Pj, Canton, GA Sun Nov 16, 2008

signed. They say they found that more money is owed on the house than they thought. This would make the price of the house more than the appraisal. Buyer has already spent money on a inspection, termiite letter and a fha inspection, plus other expenses. The closing is set for one week from now.

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it would depend if the bank has signed the short sale papers and given their acceptance for the sale to take place. if it is verbal it is not binding, it needs to be in writing. As far as extra money owed. they base their decision on what the negotiater or listing agent typed into the net sheet, so say yesterday they found that you owed $5000 in property tax for last year you didnt pay and it wasnt on the net sheet, the sale can not take place as taxes need to be paid at closing, either the negotiater or you the seller would have to come up with the money or go back and teh bank has to start over.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Wed Nov 19, 2008
Given that you are one week away from closing, it is probable that title work is in process and a title search has now been completed; therefore the first mortgage holder is in receipt of the recent search and may have discovered a problem based on what was found. The search may have revealed the seller's previously undisclosed financial obligations that were unknown to the mortgage holder but have to be satisfied in order for the title to transfer to the new buyer. These matters may be recently filed liens against the property, legal judgments against the seller that could interfere with the sale, and the existence of second mortgages. Any clouds on the title have to be addressed for the sale to materialize; all debts that attach to the property have to be paid off (or negotiated down and then paid off). Unfortunately, purchase contracts usually have no stated recourse against a seller if the seller cannot perform due to title issues; therefore if the buyer has paid money for inspections, appraisal, etc., he is out the money he has spent and can't turn to the seller for reimbursement. Short sales are risky and a seasoned real estate agent representing the buyer, or an attorney working for the buyer, will anticipate these issues and advise their client accordingly before proceeding. Experienced buyers purchasing pre-foreclosures often run title searches before they spend any other money unnecessarily. In Stark and Summit counties, some public records information on the seller and his property are on the web, so you can find this out yourself for free before you even consider making an offer. If this advice is helpful and you would want to consider my services, I offer a significant commission rebate to home buyers who purchase their homes through my brokerage. Good luck! Don French, Broker, Lake Effect Realty 330-327-1188
0 votes Thank Flag Link Wed Nov 19, 2008
In a true, well done short sale, all money owed will be discovered and a dollar amount or at least a range set by the bank on what they will accept for a sale. Sounds like something turned up later, a second maybe, that is killing your deal. That can still be negotiated if it is a second and they usually take far less. I hope you are working with a knowledgeable Realtor or an attorney. You should never offer on a short sale with the mortg. holder themselves, imho. Good luck!
Web Reference: http://www.liveinakron.com
0 votes Thank Flag Link Sun Nov 16, 2008
In my experience, a short sale needs the final approval of the lender or lenders involved. I wonder if both parties (buyer, homeowner) are being represented in the transaction by Realtors experienced in short sales. I certainly would recommend you contact local real estate attorney to review any contracts and agreements you have signed and to obtain legal advice as to your options and obligations. Good luck. Emily Medvec
Web Reference: http://www.emilymedvec.com
0 votes Thank Flag Link Sun Nov 16, 2008
Pj,

The wording of the contract will spell out what the bank is allowed to do. This is one of the reasons "short sales" take so lone....unexpected things can pop up that effect the loss amount.

Our recommendation is to refer this to a real estate attorney for their review.

Short sales are appealing but come with so much hidden baggage, delay, confusion, and disappointment that great buys become so-so buys and the experience a nightmare.

Good luck,
The "Eckler Team"
0 votes Thank Flag Link Sun Nov 16, 2008
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