Home Buying in 21842>Question Details

jadenardi, Real Estate Pro in Aberdeen, MD

What happens if proceeds of sale do not cover the outstanding mortgage and seller is required to bring cash to the table to pay off the mortgage and?

Asked by jadenardi, Aberdeen, MD Sat Oct 5, 2013

Seller fails to do this?

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6
Jessica Hood, Realtor & ASP’s answer
Oh boy, that should have been addressed with the Seller and his agent BEFORE he accepted the offer. If the Seller is unable to bring the cash to settlement and the mortgage can't be satisfied, the property cannot be sold.

The Seller has made a commitment to sell you this property. I would suggest that you work through your agent to propose alternatives such as the seller getting a non-secured loan or a loan from a family member to resolve this.

If you are not off by that much, you may even want to offer to meet them half way if you are able.

Always know that you can consult an attorney for detailed contract advice.

Laura Roskelly, Realtor® & Accredited Staging Professional
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0 votes Thank Flag Link Mon Oct 7, 2013
When a Seller lists the property the Listing Agent should compute, worst-case-scenario, the cash shortfall required to close, as an example: Lowest anticipated Sale Price (based upon current comparable sales and market conditions), less cost of sale, less debt retirement. The Seller will have a realistic amount due, cash-at-closing, required for settlement. It should never be a surprise, provided the Listing Agent has adequately prepared the Seller in advance.
0 votes Thank Flag Link Sun Oct 6, 2013
Jadenardi,

From the nature of your question it appears your home purchase is in peril once the title work arrived at the settlement company and the settlement processor determined the seller has to bring funds to the settlement table in order to "pay off" the existing mortgages and or liens.

The seller MUST pay off all existing liens in order to convey clear title. This should not happen if the listing agent does their job and prepares a sellers "NET" sheet showing the proceeds and or shortages of the home sale. In addition, buyers agents can access the "land records" in all Maryland counties and review the mortgage information and liens to be sure the home can be transferred to a new buyer.

Not knowing the amount of the sellers shortage may I suggest the listing agent/broker have the seller sign a promissary note with the listing agents broker to pay the listing side of the commission at a later date ( assuming the sellers shortage is LESS than the total $$ amount of the listing side).

If the sellers $$ shortage is higher,, a short sale may be an option if the seller qualifies or is agreeable to short sale. If not, you may have to move on to find another house.

Sorry this happened to you.

Greg Myers
RE/MAX Realty Group
0 votes Thank Flag Link Sun Oct 6, 2013
This should have been brought up early in the contract from the Listing Agent and the Sellers. Sounds like the Listing Agent may have failed to complete a Sellers Net sheet ....that is where this would have been revealed prior to everyone signing
0 votes Thank Flag Link Sat Oct 5, 2013
To my knowledge the sale will not be consummated. That said, the title company/settlement attorney and/or their agent should have known this in advance along with the seller. A short sale could have been an option. Even if not, this is certainly something that the Sellers should have known and made arrangements to take care of.
0 votes Thank Flag Link Sat Oct 5, 2013
Hello

In short the transaction will not close. Either the seller brings the necessary funds via certified check.

Good luck
0 votes Thank Flag Link Sat Oct 5, 2013
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