Be careful when you deal with a short sell, especially someone like this Seller's attorney. Hope nobody become a victim in the future, either a seller, a buyer, a lender, an agent, or anyone involved.
Just curious, it is probably not common for an attorney to behave like this, isn't it? Any other experience to share?
Not all lenders/banks will be willing to pay seller paid closing costs, though 80% of them will pay up to 3%. All parties should have signed a PS with language stating that the sale is subject to third party approval acceptable to the seller and you would be provided evidence of approval prior to closing. The demand letter or "short sale approval" would have stated the terms of the short sale and whether the lender would agree to the 3% back. Someone should have picked up on that.
Unfortunately, when dealing with short sales if the PS is written correctly, the terms can change at anytime. That does not mean you have to accept the terms as a buyer, it is your choice to accept or back out. Did you, your attorney or buyers agent ever see the short sale approval?
a. wait for the Bank to respond - our offer is very competitive, well above the appraisal.
b. take the loss
c. take some compensation from the seller side
d. legal action
At the time when the bank approved the sale, it should be either with the approval on the credit back or without.
1. If with the credit, then the bank should not have a last minute change (the bank may not have an incentive to withdraw considering our offer was so competitive). If this is the case, is it legal for a bank to change their mind? Any experience?
2. If without, then it is simply the Seller's attorney's fault and the Seller's attorney has to take the responsibility (if the attorney is a professional).
Let us know what happens, it's a rapidly evolving market with short sales, good luck in your future searches,