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Anthony, Home Buyer in California

What happens if we don't close escrow on time due to delays on the sellers bank? This is a SHORT SALE

Asked by Anthony, California Tue Aug 19, 2008

Everything on our side (buyer side) has been taken care of, contigencies have been released and loan docs have been signed.

Is the seller in breach of contract ? can we back out of the contract? who is going to pay all of those escrow fees?

Also If they (sellers bank) don't close on time we don't want to back out of the contract completely because we still love the place but can we re-negotiate on the purchase price? (I'm thinking the value of the property has gone down)

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Unfortunately, you are at the mercy of the bank. There isn’t much you can do if the bank does not close on time. You are on the hook for your costs if you back out. You cannot renegotiate the price because you and the bank came to an agreement. You can back out, but there is a chance you may lose your deposit if you removed all the contingencies. Speak to your realtor about how to prevent that from happening.
1 vote Thank Flag Link Thu Aug 21, 2008
Hello Anthony,

Hang in there - banks now are overloaded with short sales and are under staffed. Find out if there is anything else the bank is waiting for, if not, try to get some info as to when the bank can close, is it another week or another month? Either way, the banks are overloaded with paperwork. I submitted a short sale offer to a bank this month and they have not reviewed it yet.

Best,
Yona Bello
Web Reference: http://www.YonaBello.com
1 vote Thank Flag Link Wed Aug 20, 2008
Anthony:

A few of questions:
1. Are you represented by a REALTOR?
2. Did you sign a C.A.R. form SSA - Short Sale Advisory
3. Did you open escrow, remove contingencies and sign loan documents before you had written acceptance of your offer by the Short Sale Lender?

If your answers to any or all of the above are NO then you have the following problem(s)
1. No REALTOR - who has been guiding this transaction? Without someone negotiating on your side, you can find yourself in a very lopsided contract. You might want to contact an attorney to review your situation at this time.
2. No to the SSA - Do you know your rights and the seller's rights in a short sale? The SSA clearly states that the Seller does not and cannot guarantee that the Short Sale Lender will accept your offer and that any costs out of your pocket are your responsibility. The form also would have allowed for you to NOT incur any costs UNTIL the Short Sale lender approved the sale, by beginning your 17 day inspection period at that time, opening escrow and depositing your good faith deposit check at that time, and basically beginning the transaction only after the Short Sale Lender had provided approval.
3. NO to this question means you jumped the gun. Until you have WRITTEN approval of the Short Sale by the Short Sale Lender, you do not have a deal. They have to accept your purchase price as payment in full and agree to pay off and or remove all liens, so you can obtain the property free and clear of liens (which you will need in order to obtain title insurance). I would find it hard to believe that your lender would have drawn loan documents without this, so hopefully you have a written approval. Once that is obtained, I am not aware of how the bank could continue to hold up the closing. This document is their closing instructions to escrow and title. No further action should be needed.

Contacting your agent or an attorney may be your most prudent move at this time. If you would like to contact me directly for further discussion on any of the above feel free to do so. Dare to Dream.

Shel-lee Davis
Real Estat Consultant
RE/MAX Palos Verdes Realty
1 vote Thank Flag Link Wed Aug 20, 2008
Banks often hold up the process. If you had included any clauses about a delay in your offer, the bank most likely would have rejected the offer.
1 vote Thank Flag Link Wed Aug 20, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
First you should note only about 1 out of 10 short sales actually close. With that it is virtually always the sellers bank holding things up. If you want the house all you can do is get an extension, you cant renegotiate the price or you would have to start the process over. you should have signed a disclosure at the beginning outling what happens if it doesnt close on time and whose fault it was depends on what happens. at any time you can request a release of escrow. in needs to be in writing. Unfortaately they do not pay you back for any costs you have paid during the process. Good luck with your purchase
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Wed Aug 20, 2008
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