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We entered into a short sale approved by the bank on 5/09. However the seller refuses to communicate with anyone and will not allow the sale of the

Asked by , Sat Feb 6, 2010

house to move forward leaving us the impression seller wants to back out of the sale.. We learn a personal lien might be placed on the house but there is no equity in the property so we don't know what is holding up the performance of the sale. Do we have any recourse to enforce the sale?

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Harold Sharpe’s answer
Hi Jasgs2,
I think you would be better served if you sought legal advice form a real estate attorney.

Harold Sharpe
So Cal Homes Realty
(951) 821-8211

http://www.socalhomesrealestate.com
1 vote Thank Flag Link Sat Feb 6, 2010
BEST ANSWER
If the seller is not motivated to move out and complete the transaction there is little you can do. The bank will end up foreclosing on the house but it can take some a long time and the seller may be motivated to ride it out. You can try to negotiate separately with the seller through your Realtor to see if there is something else you can do to accelerate the transaction. Otherwise the advise below is very sound, let it go and find another home.
Web Reference: http://www.targetrate.com
1 vote Thank Flag Link Sat Feb 6, 2010
This is one of the myriad of problems that many experience with regards to short sales. It really takes an experienced agent to be the listing broker to facilitate the sale and an equally good strong agent to properly be an advocate for the buyer. The answers to move on are correct. Take heart there are dramatic changes coming about for short sales that will not only facilitate but shorten the length of the actual escrow etc to no more than 45 days.
Best of Luck
Don Linden
Realtor / E-Pro / CMIS / BMA / CMMS
Relocation Specialist / Seniors Real Estate Specialist
DRE #01251120
"Thank you for thinking of me when referring your family, friends and business associates. It is greatly appreciated"
Prudential California Realty, Sherman Oaks
818-380-2138 (direct / voicemail) 818-515-8936 (cell)
818-386-9007 (fax)
http://www.DonaldLinden.com (website)
DLinden@sbcglobal.net (e-mail)
1 vote Thank Flag Link Sat Feb 6, 2010
I agree with all who said maybe it is time for you to start looking for a new home. If the seller is not cooperating one can assume that they have changed their mind. You need to have your Realtor talk to their Realtor. If you can't get answers that make sense then you should cancel. Unfortunately sellers who don't want to leave a home have been known to trash it before they leave. Working with a seller who appears to be uncooperative creates a lot of stress. Anyway you look at it buying a home is stressful, why add stress that can be avoided. Good luck and don't let this experience keep you from making offers on other short sales. Most short sale sellers understand the benefit of a short sale and do their best to make the transaction as smooth as a short sale transaction can be.
0 votes Thank Flag Link Tue Feb 9, 2010
Your best recourse is to get to the root of the problem. You've been waiting so long, it would not be a bad idea for all parties to sit down together and find out what the issue is. How much is the possible personal lien for. See if presented properly to the 1st lien holder, they may cover the cost so the liens are released and escrow can close.

It can be presented to the 1st lien holder in a light that shows them it is in their best interests to get this to go through because it will cost them a LOT more money to let the home go to auction. It's all in how this situation is presented to the 1st lien holder.

Don't give up on this one until you at least have a sit down with all parties.

emilyknell1@yahoo.com
562-430-3053 cell
0 votes Thank Flag Link Tue Feb 9, 2010
Jasgs2
Short sales have no guarantees even when the seller is cooperating. I personally would move on because if seller is putting up road blocks the bank may just not want to deal with it and foreclose anyway. It is so hard when you have waited so long but it could end up busted anyway.

The one thing I will say is the longer the sale gets dragged out, sometimes the less the seller cooperates. Have a talk with your Realtor and their Realtor and discuss what everyones input is. That might help you understand what you best choice is moving forward. It is difficult to enforce short sales.
0 votes Thank Flag Link Sun Feb 7, 2010
Hello Jasgs2,

I think at this point you might want to move on and perhaps wait until the property becomes an REO (bank owned). A short sale is a difficult process for both buyer's and sellers. With another lien on the property possibly it is going to be difficult to get it approved. You have waited to long. I don't think you have any recourse but I don't know the specifics of your contract, so check with your agent and start looking for another home is my recomendation.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes Thank Flag Link Sun Feb 7, 2010
The title to the home during a short sale is the borrower. However, everything is "subject to", lender approval. The lender is taking less for the loan than they originally lent to the borrower so they must agree and the borrower must comply with the requirements of the bank to complete the short sale.

Also, the borrower gets a minimum of 111 days to cure the debt and if he is having second thoughts about completing the short sale for what ever reason then there is not much you can do.

This is one of the difficult things about a short sale. Not every homeowner gets their short sale approved either. Home owners wishing to do a short sale must cooperate fully with the bank and sometimes the bank can ask for "seller contribution", funds. If the seller/borrower does not want to cooperate with the bank then the bank will foreclose.
Web Reference: http://www.soreal.biz
0 votes Thank Flag Link Sat Feb 6, 2010
A short sale is only possible with a willing seller, willing buyer, and willing lender (s). If the seller is unwilling to cooperate, whether it is as simple as communicating with their Realtor, or as essential as supplying all necessary documentation in a timely manner, the sale will not proceed.
A seller can live for free in their home as a foreclosure progresses, and even stall a foreclosure by filing bankruptcy. This may seem like a more viable solution to a seller who has not suffered real hardship, but who has no equity in the property. (please see my answer here: http://www.trulia.com/voices/Foreclosure/how_long_does_it_ta… )
The lender will not complete a short sale without hardship.
If this seller will not participate willingly, thoroughly, and rapidly, please rescind your offer and move on.
Best of luck,
Deborah Bremner
REALTOR, 00588885
Certified Short Sale Professional
Certified Home Retention Specialist
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes Thank Flag Link Sat Feb 6, 2010
Jasgs2
I would suggest approaching this transaction from the seller's point of view. In many cases there are limits to what the lender(s) may be willing to do. As it is they are taking a big hit in writing off a big junk of the loan, plus are paying closing costs. They reach a point where they simply say "we are not going to do anything further".

So, seller wants to sell because his alternative is foreclosure. Where is the middle ground here?

My suggested strategy:
1. Determine the fair market value (FMV) of the property. How much are you willing to pay?

2. If the the FMV is more than the negotiated sale price, now you have to get creative. Ask for a meeting with the seller and their agent. Ask them what it will take to move this transaction forward.

3. Example - there is a lien against the property for $20,000 and the lender will not pay off the lien. At that point, you need to decide if you want that property. Can YOU pay the lien...or negotiate to pay part of it.

If the lender forecloses the lien holder gets nothing.. Zip. ZERO, NADA! It is normal for lien holders to be paid a percentage of their lien...like 10%, 20%, etc. See what you can negotiate.

The best question for Realtors to be asking during a transaction is this " What can we do to move this transaction forward?"

Good luck.
0 votes Thank Flag Link Sat Feb 6, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Dear jasgs,
Sorry you are having such a hard time. There is not much you can do to enforce a sale if the seller will not allow the transaction to finalize, the bank will likely foreclose on that property. Do yourself a favor, and start looking at another home.
0 votes Thank Flag Link Sat Feb 6, 2010
This is a tough one but not uncommon. Unfortunately the approval by the seller’s lender(s) is a contingency of the contract, and if the seller cannot gain their lender’s approval, or for some reason the seller cannot meet the conditions of the short payoff approval then the sale cannot proceed.

In this case I’m afraid this sale is probably going no where fast. So it’s probably time to move on to another property.

These contingencies in a short sale do exist in order to protect both the sellers and buyers involved in such transactions. Just imagine if you were in the seller’s position, unable to keep your home and forced to sell due to financial hardship. And in order to avoid a costly foreclosure on your record you decided to sell the property even though you owe more against the property than what a buyer was willing to pay for it.

Then after coping with all the unpleasantry’s of selling your home (in which you were not going to receive any of the proceeds of sale), open houses and strangers constantly coming through your home, you found out that in order to be free of your mortgage debt your lender was forcing you to carry a personal note in which you must make monthly payments over the next 5 to 10 years on a home you no longer own.

This wouldn’t sound like the ideal situation to me personally, but then again, depending on the type of mortgage and property being sold, it may just be better than the repercussions from a foreclosure. Hopefully the seller is receiving both legal and tax advice before they make their final decision to cancel the sale.

And, by the way, these same contingencies are also protecting the buyers of short sales. If the seller is never able to gain short sale approval but the buyer makes his/her earnest money deposit into escrow, then the buyer’s deposit could possibly be tied up for an indefinite time frame (while the seller attempts to gain short sale approval) until both the buyer and seller agree to mutually cancel the contract.
0 votes Thank Flag Link Sat Feb 6, 2010
Not really. Over 1/2 of short sales don't work for one reason or another. Sounds like its time to move on to another house. You could aways go to the forclosure sales and deal with the bank.
0 votes Thank Flag Link Sat Feb 6, 2010
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