Home Buying in Massachusetts>Question Details

Mony, Home Buyer in Massachusetts

We as buyer made an accepted offer and made inspection of the house and then we found out that the house is

Asked by Mony, Massachusetts Fri Jul 11, 2008

on short sale. Our agent also did not know it. can we sue the sellers agent to get back our money we paid for the inspection

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Hello Mony. I can understand your frustration, but from what you are telling us in your post, I can't figure out whether you cancelled the contract or whether you are still in contract. If you are, I am wondering whether you could not wait and see whether the lender approves the short sale. If that's an option, the contract could be revised to reflect the short sale situation and there should be a time limit for the bank approval. If the owners are not short by a lot of money, there's a good chance that the lender might approve the short sale. Of course without knowing more about the borrowers situation, it's hard to tell.

I am also not sure whose fault it was that it was not made clear that this was a short sale. Sometimes, a listing becomes a short sale because of a pre-payment penalty that was not known to the listing agent and sometimes even the borrowers are not aware of the pre-payment penalty (yes, that is possible). So, without knowing more about the circumstances of your particular situation, it's really impossible to render an opinion on who should pay for what. If you have not already cancelled the agreement, I would say there's a good chance that the owner is still bound by the terms of the agreement and may have to come up with the money to close escrow. You can't unilaterally change the terms of the agreement just because you found out that you owe more than you thought you did. If this was an innocent mistake, it's possible that the seller is not short by much. If it was information that was intentionally withheld from you, I personally think that someone should reimburse you for the cost of the inspections. To me, it does not make sense that someone would purposely enter into a contract that does not address the short sale contingencies when they know that they can't perform because they don't have the money to close escrow. You should consult with an attorney about your remedies. However, frankly, unless you intent to force the performance of the original contract that you entered, I am not sure you'd want to spend money on getting legal advice on how you'll be able to recover a few hundred dollars. I am just trying to be practical here as I would not want you to spend as much money as you'd be able to recover. Good luck to you.
1 vote Thank Flag Link Fri Jul 11, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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Hi Mony- My only 2 cents, in addition to what others have said, is be careful you don't go spending $500 in attorney's fees to hunt down a credit on a $300 home inspection. Don't know what you spent on that, but it may not be worth "the fight"- unless you can do it without an attorney's help. Good Luck,

Ken L.
0 votes Thank Flag Link Thu Aug 7, 2008
Mony,
This must be a real let down for you. Before you do anything, you should consult an attorney. Usually a seller will not sign a Purchase and Sales Agreement if the short sale isn't disclosed as part of the Purchase and Sales agreement. This would be a huge oversight for everyone involved.
0 votes Thank Flag Link Wed Jul 23, 2008
The contracts do specify what Mr. Melby stated, but the contracts also state that the seller is to deliver a clear title by a particular deadline. If they are the parties that breach the contract, then there is something called "non -performance" that entitles the damaged party, rights. You should consult with an attorney, but shop around for someone who will help for your short money. Your agent may even be able to help you with that.

Best of Luck!
~M
Web Reference: http://MelissaBMancini.com
0 votes Thank Flag Link Sat Jul 12, 2008
The contracts that many agencies use specify that the home inspection appointment, and fee, are entirely the buyer's duty and risk.
0 votes Thank Flag Link Sat Jul 12, 2008
While I totally understand everything said here, I'd like to make a few points. (1) the process of finding out the mortgage balance may be something that some agents do in some parts of the country, however, unless I think there's an issue-this is left to the title company. (2) Even if the listing agent knew, if her sellers told her it was confidential, then she COULD not tell your agent or you, although there MAY have been signs (how much they paid for the house, etc); (3) I am still not sure how you came upon the information, or how it is affecting you. If the sellers accepted your offer and there was no contingency (i.e. "third party approval") on that ratified contract, then they would be the ones in breach, so it would be reasonable for you to ask for them to refund you anything you've spent, and an attorney could help you take it further than that. Regards, Vicky
0 votes Thank Flag Link Fri Jul 11, 2008
typo correction: because it's the right thing to do.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Fri Jul 11, 2008
Mony, here's the thing: a good listing agent, when they have the agreement signed with the seller, obtains the mortgage balance due at that time. That's part of the job of a listing agent. If the numbers are close, it is incumbent (fairness to the potential buyer in part; fairness to the seller, of course) upon the agent to pull, each month, an update on the balance due (if the numbers indicate a problem). If at any point it's clear that, whether due to not making payments, or whatever, the asking price is too high to make it a normal transaction, requiring a short sale, fairness to a buyer would dictate, before the buyer spends a CENT, disclosure of this fact.
To view it as just a bit of change is completely out of line. Expecting a consumer who had two agents make either an error or an omission, to "forgive" money thrown away is not the right advice.
The ideal outcome would be to see one or the other (Realtors) offer to pay for the inspection because it would it's the right thing to do.
Legally? A lawyer can provide a simple answer.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Fri Jul 11, 2008
Good evening Mony:

Are you sure the sellers agent was aware of the short sale? If the sellers were aware of the short sale situation , and did not disclose it, the sellers have breached the agreement by agreeing to accept an offer knowing they could not deliver the title.

You would need to contact a real estate attorney to explore your remidies under the law.

Another possibility would be to submit a lower offer, see if it gets accepted and wait for the short sale to close.

Regards,

Rob
0 votes Thank Flag Link Fri Jul 11, 2008
It should have been disclosed to you by the listing agent, and if you are represented by a buyers agent, uncovered by them, as well. Call the broker and demand a refund of your inspection money- non-disclosure of such a "material fact" is at the least unethical, and likely illegal on the part of both agents. Good luck. If you encounter trouble, check with a lawyer specializing in real estate.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Fri Jul 11, 2008
Rather than sue, have you tried asking for it back? If they refuse, ask the listing agent or his/her broker to reimburse you. The listing agent should have known....there is no excuse for not knowing. And if he knew and didn't disclose it....they is an error also.
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Fri Jul 11, 2008
The Hagley G…, Real Estate Pro in Pleasanton, CA
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