There are a couple of very important questions that need attention here.
1. The lender that makes the loan does so with certain criteria, particularly time. You don't provide any specifics, so in general:
- if the amount of time between signing the final loan docs (your responsibility) and the seller's duty to sign over the deed to the property (which serves as the collateral for the loan) exceeds a certain point, the lender will need to re-cast the loan, probably with a higher interest rate (rates are going up).
2. Seller in breach? Maybe. I do not offer legal advice. You need to talk with an attorney for legal advice. If one party does not fulfill their obligations then it would seem to me that they are in breach.
3. Paying escrow fees? The apportionment of fees should be noted in your HUD 1. Look at the them, ask your escrow officer if you have questions.
4. Decline in value. You do not provide any time frames, so let me explain. If you opened escrow in March, and six months later the seller is still not proceeding with the sale, then you may have a couple of problems:
a) the property probably has declined in value
option A - the lender does not re-appraise the property, funds the loan, you close escrow, you own it.
option B - more likely the underwriter requires a re-appraisal, it will show a decline in value. In my particular market properties on average are losing about 0.9% per month.
If the property is reappraised at a lower value:
i) the lender may ask for you to kick in a higher down payment to make up the difference
ii) you can ask the seller to lower the price to the appraised value
iii) you might be able to cancel because value is one of the characteristics of the property, which has changed from the time you opened escrow. Talk with your Realtor about this.
It is not uncommon for short sales to drag on, not uncommon to have values decline, so all parties should be aware of this possibility.
Your agent should have already set expectations in terms of short sales. There's nothing "short" about them; it is totally unpredictable dealing with asset managers, etc. This is not the same as a regular sale where everything is buttoned up in terms of timelines.
If you got a really good price on the property compared to current market values (remember that the seller had paid more for the property than what you're buying it for), it may be worth the hassle to wait it out for a few days. But by all means, get the agents to follow up. Sometimes, the delay is due to the lender needing more documentation, etc. to be processed and approved.
You can suggest to your agent to prepare a Notice to Seller to Perform (NSP) the contractual action to close escrow. If seller does not take the specified action, Buyer may cancel the Agreement.
I don't think this is the time to renegotiate the purchase price since your offer has already been approved at a certain price. If you do, it's like starting the short sale process all over again. Or are you getting buyer's remorse? You don't incur escrow fees until you close escrow, but you are responsible for paying for your own inspections and appraisals since the service has been provided. The seller/lender will not reimburse you for those not unless that was agreed upon in the contract.
As far as escrow fees...there should be none. However...if your lender went ahead with an appraisal...and inspections were done prior to lender approval.....you will need to pay those fees. Your Realtor should have advised you not to proceed until you had lender approval. You may also have lender and notary fees if you've signed docs. I'm shocked your lender sent docs to escrow without a valid contract.
I would talk to the Realtor about reimbursement if you were not advised properly.
Not knowing the entire situation, I cannot offer legal advice. I would ask a lot of questions of your Realor and lender immediately!
Oh...the Realtor below is referring to a bank owned home....two different situations....