Home Buying in 92833>Question Details

Ht, Home Buyer in 92833

short sale: Seller's counter offer was accepted by buyer and bank has increased the selling price of the property.Does buyer can backout from?

Asked by Ht, 92833 Sun Dec 26, 2010

Escrow. Buyer has money in Escrow for about 6 months. Original counter offer by seller was accepted by buyer. Bank has increased the selling price of the house significantly (about 10% of the original counter offered price). Selling prices is now significantly higher then seller's counter offered price. Does buyer have option to backout and pull money out of escrow.

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Bob Phillips’ answer
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First of all, your agent should NEVER have advised you to put money into escrow, based solely on the seller's "acceptance" of your offer. It is NEVER really an escrow until the lender has FINALLY accepted an offer from you, OR, your acceptance of THEIR counter-offer.

The ONLY reason an agent asks/demands that you open escrow with only the sellers "acceptance" is because that/those agents are attempting to attach you to the property. They know that it is difficult to withdraw your money from an opened escrow - and that the seller has to approve for you to get your money out of escrow - not an easy undertaking. The ONLY persons who benefit from such a tactic are the agents - PERIOD!

Having said that, as part of opening escrow, and/or even just getting the seller's "acceptance" there should be a CAR ( State of California DRE.) Short Sale Addendum, as part of the transaction, which spells out that the escrow/transaction is strictly CONTINGENT upon the final approval by the lender, of your offer, OR, your approval of their counter-offer - which apparently you are reluctant to provide.

As you have a contingency, this SHOULD be an out for you - a loop-hole - designed to allow you to extract yourself from the transaction/escrow without jeopardizing ANY of your deposit.

To re-emphasize. No buyer should open an escrow/put money into an escrow BEFORE receiving final approval from the lender. The ONLY things that can result for a buyer in such a case are ALL bad for them.
Web Reference: http://BobPhillips.net
1 vote Thank Flag Link Sun Dec 26, 2010
Assuming that you haven't accepted this counter-offer, then you could counter with your previous offer (that the seller accepted), or reject the bank's counter.
1 vote Thank Flag Link Sun Dec 26, 2010
Ht,
It sounds like the Short Sale was not approved by the short sale lender. As a result, you should be able to get all of your money back except for anything the Escrow Company may have spent at your instruction.

Best of luck,

Thom Colby
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END Transactions in our Brokerage. IN MY OPINION, there is NO benefit to the Seller or Buyer and, only benefits the Agent. Also, NEVER use your RE Agent / Broker as your Lender or vice versa. Also, be careful when using Real Estate Broker-owned Escrow and Title Companies - they can be loads of trouble. Our recommendation is to use companies that are all independent of each other.
888-391-5245 Direct Cell
THOM@THOMCOLBY.COM
DRE# 01398570
0 votes Thank Flag Link Mon Dec 27, 2010
I consider myself an expert in short sales.

You can back out and get your money back.

Like someone else stated, as a buyer, I would never put money into escrow nor would I spend a dime until I have written approval from the foreclosing bank on the terms I agreed to.

In the web references, I placed a blog I wrote on how to buy a short sale.
0 votes Thank Flag Link Mon Dec 27, 2010
Wow - isn't it amazing how many different points of view you can collect via Trulia?
Actually, if your transaction is based on the CAR forms and includeds a Short Sale Addendum, you are not really in contract, because you do not have bank approval on the agreement you and the seller reached. It is not a fully ratified contract, so you can decline to sign the bank's counter offer and there are no seller signatures required to release your deposit. You sort of enetered a pre-escow deposit. And I take a different position than my trustworthy colleague and neighbor Bob Phillips - I always suggest my buyers deposit a small amount into escrow if the short sale seller and their agent require it - it holds your position, as you are in now, where you are the only buyer the bank is dealing with - and if you really want the house and can reach an agreement on the purchase price, then you are good to go. The other thing I would do it check the comparable sales - regardless of what you and the seller agreed to - you should evaluate their response on the recent sales of comparable homes. Homes that have actually closed in the last 3 months.
Hope that helps.
Leslie Eskildsen, Realtor
949-678-3373
As seen in the Orange County Register: http://www.ocregister.com/articles/buyer-281304-escrow-check.html
0 votes Thank Flag Link Mon Dec 27, 2010
If your Agent has protected you as much as our CAR forms let him him, you should be fine. Talk to them about your options to back out. Your main concern at this point is to get your deposit back. Escrow will need both Seller and Buyer to sign Cancellation instructions so you'll be waiting on them.
0 votes Thank Flag Link Mon Dec 27, 2010
HT, a good negotiation team could be the answer to save this. Your deposit should only be held uncashed by escrow and you can hold your groud on the offer and negotiate or simply cancel based on a number of things. Your offer has got to have verbage about "subject to lender(S) approval and nothing really starts until that is accomplished. Up to that point you have no agreement. seek advice from a local professional
0 votes Thank Flag Link Mon Dec 27, 2010
Ht,

DP2 is right. As long as you reject the counter, you're fine. In a short sale transaction, you submit an offer to the seller of the property. They in turn often counter (as in your case) then send your offer to the bank for approval. It sounds like after a 6 month process, the bank has finally come around to countering and it was not to your liking. If this is the case, you can back out now and get your escrow deposit back, you can counter back, or accept the bank's counter. Those are your three possible options.

Why does the bank counter back like this? Well...the property could have been listed significantly below market value (seller and listing agent set the asking price, but it is an IMAGINARY value because it in turn has to be approved by the lender(s)). Ask your REALTOR to discuss the three options above. Good luck!
Web Reference: http://www.felixhung.com
0 votes Thank Flag Link Sun Dec 26, 2010
Ht -

Always good to review the details of the contract with your agent. Short sale addendum should have been used and this document indicates how the offer is to proceed based on lender's approval/acceptance etc. Review that document closely. Most buyer's agents are submitting a short sale addendum with the offer and this document, item F (Calif Contract) "If Short Sale Lenders' written consent or term sheet(s) provided to Seller require changes to the agreement in order to satisfy the terms of 1B (approval), (i) neither Buyer nor Seller shall be obligated to continue..."

The obligation to purchase is stated in the purchase agreement and/or short sale addendum.

Good luck!
CJ
Web Reference: http://www.TalkToCJ.com
0 votes Thank Flag Link Sun Dec 26, 2010
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