Home Buying in 12170>Question Details

Tanya Marie, Home Buyer in Stillwater, NY

Seller lied about his payoff amount and we were supposed to close October 28th. November 8th found out that he owes 14k more, but in penalties etc.

Asked by Tanya Marie, Stillwater, NY Wed Nov 13, 2013

We are in the process of buying a house. When we made our offer, the seller said he needed no more than a certain amount because that is what he owed, so we offered exactly that amount, they accepted, etc. We were originally supposed to close on Oct 28th. The seller and his attorney has been delaying the process. On November 8th, we find out that the seller owes 14k more than he originally informed us. The bank supposedly cut it to 8k, then 6k.. Both the sellers realtor and our realtor had to cut their commission which I don't think is fair. The sellers attorney will not return our lawyers phone calls.. My fiancé is perm disabled and this stress is taking a toll on his health. We also paid for homeowners insurance already. We had an appraisal, inspection of the home as well as the septic. We even had to pay for his septic to be pumped. Nobody is telling us ANYTHING! HELP! We can't & don't want to back out. We will lose all money we have invested into buying this home..

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I had the same situation in August this year. My buyers paid for all inspections and were approved for their mortgage when the lawyer ordered a title search. Thats when we found out the sellers had a second mortgage and did not have the funds to close. The sellers realtor moved quickly and the bank agreed to a short sale in less than 30 days. My buyers did not want to wait and lost the money they paid for inspections. I agree that your lawyer has to take it from here and try to get some of the money you laid out back from the sellers but its not going to be easy. I am wondering how you knew what the sellers owed. Did their agent disclose that to you? Also why is the sellers attorney not answering your calls? If the bank is willing to work this out and both realtors have cut their commission then why would the lawyer not want to put this together? The person in contact with the sellers bank has to make the next move. For now cancel the homeowners insurance. Your insurance agent will understand. Good luck to you. Buying a home should not be bad experience and unfortuntely there are so many inexperienced agents that are making it that way. When they are more concerned with making a commission than properly representing their client then something is wrong and clients need to walk away. Beware of agents that ramble!!!
0 votes Thank Flag Link Sat Dec 21, 2013
This a situation, which I strongly suggest you get your Attorney and Realtor to make ever effort towards keeping this deal from falling apart for you. It sounds as if this may be a Short Sale situation, unless you are willing to pay the difference owed. If the Listing Agent or Sellers Attorney is not comfortable and knowledgable doing Short Sales, then you may have a big problem, again, have your Attorney help you with necessary legal measures.
0 votes Thank Flag Link Wed Nov 13, 2013
When I first read this I assumed that this was a short sale.
In reading it again it does not sound like it is a short sale.
IS it????
0 votes Thank Flag Link Wed Nov 13, 2013
Our appraisal is the exact same amount as our accepted offer... He said he needed x amount because that is what he owed so that is what we offered and that is what was accepted.
Flag Thu Nov 14, 2013
Sorry, I meant to ask if I could you what the difference in your accepted offer compared to the appraisal was?
Flag Wed Nov 13, 2013
Can Inask what the difference is your offer and the appraisal was?
Flag Wed Nov 13, 2013
No.. At the time he told us he needed a certain amount of money because that is how much he owes. Found out he owes 14k in penalties. They dropped it to 8k then 6k and said it was a short sale.. We cannot get straight answers from anybody.
Flag Wed Nov 13, 2013
Very unfortunate. Until the seller can convet clear title they cannot close. Since you have an attorney, I would let them handle it. Just be sure you comply with the contract terms so that the seller does not have an excuse to cancel.
0 votes Thank Flag Link Wed Nov 13, 2013
At the end of the day, if the deal falls apart you could technically sue the sellers for damages. Their payoff amount is of no concern to you. And you have the right to expect they are negotiating in good faith. But if they don't have the money then good luck collecting on anything.

This is an unfortunate side to real estate. Things like these do happen, especially when you are dealing with distressed sales. It's enough to make someone go crazy, but your Realtor should have prepared you for this. It's not easy like you see on TV. The inspections and appraisal are a cost of doing business, however, your Realtor also should have warned you against paying for the septic to be pumped before you actually owned the house.

I know it's frustrating not to get answers, but in cases like this there are sometimes too many parties involved and it is darn near impossible to get an accurate answer in a timely fashion.

At the end of the day you probably need to rely on your Realtor to handle the situation and earn their (dwindling) commission.

Good luck!
0 votes Thank Flag Link Wed Nov 13, 2013
TM,
It is strange how this happened if both Realtors had done their due diligence with this sale. With so many sites out there, it is very easy to find out just about anything. At the very least the remarks in the listing should have mentioned something about the possibility of the property being a short sale. Since it appears that this may now be the case, hopefully your attorney can try to be in contact with the bank and explain that there is an offer on the table and a buyer ready to close and make it as speedy as possible. I had a similar situation where the buyer delayed the closing because she was waiting on a lawsuit settlement even through the bank approved her for financing and gave a clear to close. Her delay caused my seller to be penalized and ultimately need money at closing that she did not have. Guess who had to eat the loss to make the deal go through? I don't know the price of the home, but the seller's agent should take more financial responsibilty in this matter if it comes down to cutting fees. Hopefully things work out for you soon. Take care

Jason Bustelos; LREB
New York Realtor Group LLC
http://www.nyrealtorgrp.com
518-330-2230
0 votes Thank Flag Link Wed Nov 13, 2013
Thanks Tanya for your individual response.

My heart truly goes out to you and the involved agents. This is a horrible situation, nightmerish to say the least. As a seller's agent in NC I typically research a potential listing clients property(s) before agreeing to list on the open market to avoid a similar situation such as this one. As a buyer's agent I do the same for properties my buyers are interested in. With a contract in place a foreclosure date may be postponed. I've completed lots of short sale options and have a lengthy background in banking, however, I'm perplexed as to how this situation reached its current level unknowing to all parties except the seller that he was in default. Thanks so much and keep us posted.
0 votes Thank Flag Link Wed Nov 13, 2013
Tanya,

RE Homeowners: Your Realtor should have told you that although you get the quote for your homeowners, there is no reason to activate it until you go to closing at which time you need to present the DEC page.

Why did you have to pay for his septic to be pumped?

Who is doing the negotiating with the bank? The bank can close this as a "short sale" if the seller does not have enough to pay it off.

I would be happier if you were speaking with someone who actually knew what they were doing.... call Dawn Noak at 631-827-7373 (tell her Gail sent you) and ask for her advice. She is fantastic at this type of issue.
0 votes Thank Flag Link Wed Nov 13, 2013
Hi Tanya,

I'm so sorry this is happening to you. Unfortunately, the only thing I can tell you is that this does actually happen and there's very little you can do. The person to best help you right now is your attorney. If the seller's attorney isn't communicating, your lawyer will know what to do.

If you aren't happy with the agents cutting their commission, the only thing to do is pay more money. While the seller is normally responsible, he can't pay what he doesn't have. This is the same for what he owes the bank.

It's a very frustrating situation to be in. I am sorry you are going through it.

Good luck,
~Tori

Victoria Romeo
NYS Licensed Real Estate Salesperson
Certified Buyer Representative
Bliss Properties of New York
Cell: (518) 788-8865
tori@blisspropertiesofny.com
http://www.blisspropertiesofny.com
0 votes Thank Flag Link Wed Nov 13, 2013
Interesting situation. In my neck of the woods regarding traditional or short sale option properties, as a sellers' agent we get/order a sellers' pay off statement from their bank if there is a mortgage on a property. We also do the same regarding real estate taxes and HOA dues, if applicable. According to what you have written, I'm curious as to why the seller's agent did not know about the additional $14k? Or, did the seller's agent already know?

If this is a short sale option deal...buyer beware if the sale was not already approved by the bank before it was listed as a short sale option opportunity. Thanks so much for your post and good luck to you.
0 votes Thank Flag Link Wed Nov 13, 2013
My heart truly goes out to you and the involved agents. This is a horrible situation, nightmerish to say the least. As a seller's agent in NC I typically research a potential listing clients property(s) before agreeing to list on the open market to avoid a similar situation such as this one. As a buyer's agent I do the same for properties my buyers are interested in. With a contract in place a foreclosure date may be postponed. I've completed lots of short sale options and have a lengthy background in banking, however, I'm perplexed as to how this situation reached its current level unknowing to all parties except the seller that he was in default. Thanks so much for your response.
Flag Wed Nov 13, 2013
Thank you for your response.. This was not a short sale when we agreed on offer, closing date, etc. The sellers agent supposedly had no clue about the additional 14k which were not part of the actual mortgage but penalties and whatever else. The bank dropped the price from 14k-8k, and then our lawyer told us they dropped it to 6k but our realtor told us 7k. Now all of a sudden it has turned into a short sale when it wasn't in the beginning. The seller has no money, both of our agents (seller's and ours) had to cut their commission twice. We have no closing date when the original was Oct 28th. Everything has been completed, agreed to, etc except the closing.. The seller called for his payoff 2 days before we found out which was on November 8th. The seller also lied on his disclosure forms.. The seller has pretty much lied about everything.. His home was supposed to go into foreclosure on November 1st but we had contract signed and everything beginning of October.
Flag Wed Nov 13, 2013
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