Home Buying in Shoreview>Question Details

Lisa, Home Buyer in Shoreview, MN

can i cancel a purchase agreement for a short sale since the bank is so slow, will i loss earnest money?

Asked by Lisa, Shoreview, MN Tue Feb 15, 2011

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11
Hi Lisa!
I KNOW!!! I feel you pain. It becomes very frustrating to deal with this process, isn't it?? If your purchase is in MN, you may have signed a Short Sale Contingency Addendum as part of your purchase agreement. If so, it clearly states in there that if you should decide to walk away prior to the bank approval, you will receive your earnest money back, no harm, no foul.

What does your agent say?? Your agent should be able to advise you about these delicate matters. It's also important to make sure your expectations are realistic about how short sales go. Depending on the seller's lender, they can take a REALLY long time. I always advise buyers who are purchasing short sales to make their peace with the fact that it's going to be tough to hang in there.

Good luck~
0 votes Thank Flag Link Thu Feb 17, 2011
Lisa,

As a short sale negotiator, I find that the number one reason for short sales falling apart is buyers losing patience. Understand what you are feeling is normal - buying a house is an emotionally charged process and sitting around waiting for up to six months of longer for an answer and/or a closing can take the wind out of your sails.

I would encourage you to think back to why you fell in love with the house in the first place and the great deal you are getting. Before you pull the plug, understand that given enough time nearly all short sales will come to closing - so if you stick with it, you should be able to get some resolution.

In the end the choice is yours, but there are three options for buyer's in this market:
-Pay fair market value or above for a traditional sale with a seller with equity.
-Prepare to wait 3-6 months on a short sale but make a fantastic deal the seller couldn't otherwise afford.
-Deal with bureaucracy of a bank and possibly get a deal if you meet their terms.

I find that good bad or otherwise that most people are deal seekers in this marketplace so they fall into the latter of the two categories but want to work with traditional sellers. The moral of the story is that to get the good deals you need to deal with the baggage that comes along with it.

Before you pull the plug, have your agent check with the listing agent to see where things are at. You might be closer than you think.

Cameron Piper
Coldwell Banker Burnet
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Wed Feb 16, 2011
It depends how the agreement was written and the dates filled in on the shortsale addedum. There is a box to be checked that shortsale approval must be recieved by a certain date, if you are beyind that date you can get your earmnest money back, if you are with in it they can keep it and try to uphold the contact. Each states agreements and rules are different so be careful when you read answers on here, some are not licensed here. Good luck
0 votes Thank Flag Link Wed Feb 16, 2011
Purchase agreements are time sensitive, check with your agent.
Good luck,
Dan
0 votes Thank Flag Link Wed Feb 16, 2011
Lisa, check your paperwork. Are you working with a Realtor? Have them check on this. I would not have given the earnest money until I had a signed PA. Good luck.
0 votes Thank Flag Link Wed Feb 16, 2011
As mentioned several times, it depends on the wording of your contract.

And as always, don't be afraid to seek legal advise. Real Estate agents are not attorneys.

Steele
0 votes Thank Flag Link Wed Feb 16, 2011
The short sale that we were involved in was taking an extremely long time and my buyer decided not to wait any longer. We did a mutual cancellation and he got out of the contract and his Earnest Deposit was returned to him. Debby White Great Expectations Realty Charleston WV
0 votes Thank Flag Link Tue Feb 15, 2011
In Minnesota as part of the standard purchase agreement, there is now a 'short sale contingency agreement' which gives a set date where the contract is void and both parties walk away from the transaction. Another part of the contingency is you don't have to provide earnest money until the bank approves the sale and the contingency is removed.

Check your paperwork to see if you signed a short sale contingency agreement. And of course, check with your agent. While there shouldn't be a problem with canceling the purchase agreement (as the contingency of bank approval has not yet been met) the short sale contingency agreement makes it a cleaner separation.
0 votes Thank Flag Link Tue Feb 15, 2011
Lisa,
Alina is correct; it will depend on the language in your contract. You may have a time limit for the lender to reply which if you don't meet, you risk losing your earnest money. You may have a "get out any time before approval" clause, but until your contract is reviewed we can't know for sure. Have you asked your agent?
How long have you been waiting? Most short sales take 3-6 months and 9-12 hasn't been uncommon. My longest short sale was 18 months.
Assuming you are able to leave at anytime, consider watching the market for a home you like better. I've advised several buyers to do this and while it makes more work for me, once all is done they know they are in the right house. Good luck.
0 votes Thank Flag Link Tue Feb 15, 2011
of course! Anytime prior to the closing.
0 votes Thank Flag Link Tue Feb 15, 2011
Hi Lisa,
Without knowing the details of your purchase agreement it is pretty hard to answer that question. Have you asked your real estate agent?
0 votes Thank Flag Link Tue Feb 15, 2011
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