Paulapearle, Home Buyer in Castaic, CA

We, the buyers, signed a Residential Purchase Contract, the Seller signed. We all knew this was a short sale. However, neither Buyer or Seller signed

Asked by Paulapearle, Castaic, CA Mon May 17, 2010

a short sale addendum contract (There is NO Short Sale Addendum included in the signed Purchase Agreement contract). The Listing agent lied to us, said we "had the home at a certain price, and now the bank wants $24,000 above the signed Purchase Contract and above the Apprasial. Can we force the signed contract, even though we knew we were waiting on bank short sale approval? Note: we probably wouldn't force the issue and hurt another human being in that way, but could we enforce the signed sales contract at the price we agreed on?

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14
Tony Lewis, Agent, Valencia, CA
Mon Sep 10, 2012
Paula Pearle,

A successful short sale needs cooperation from the seller and is dependent upon a Realtor that knows and understands the short sale process. No home can sell unless the loan is paid off and the lender must decided whether there is a true hardship that will make selling as a short sale to be allowed.

A contract between the seller and buyer can not occur unless the home owner is allowed out of their loan. This leads to the terms of the original offer being changed.

Your success begins with finding a Realtor that knows the process and can do their best to make sure that all parties to the transaction have the knowledge and education to give the best chance of success.

Tony Lewis
RE/MAX of Valencia
661-702-4720
Web Reference:  http://www.TonyLewis.com
0 votes
Sona Gallatin, Agent, Santa Clarita, CA
Mon Sep 10, 2012
I agree with my fellow agents except you mentioned that they are requesting above appraised price? That seems odd.
0 votes
Emelia Sanch…, , Ontario, CA
Mon May 17, 2010
Paula,

The fact that you did not include a Short Sale Addendum only hurts you because that is the form that stipulates when the contingency period will begin and when your earnest moneyt will be deposited in escrow (preferably after short sale approval). This explains why you have already spent money on an appraisal. Keep in mind that the appraisers job is to find supporting data for the sales price. They will not say Oh it is worth more and give you that figure. The BPO must have come in higher so the lender wants at least market value increasing the price by the 24K you mentioned. If you had waited on the appraisal it might come in at the price stipulated by the lender. If the lender found data supporting the increased price you know the appraiser will also.

I am sure the listing agent had her seller sign a Short Sale Addendum with the Listing Agreement and the property was marketed as a Short Sale.


I suggest you contact your realtor, sit down and discuss your options if nothing else make sure your initial deposit is protected.
0 votes
Richard Leci…, , Tucson, AZ
Mon May 17, 2010
Just a follow up. What is the amount owed yet by the seller? Maybe it wasn't a short sale at all. You should have signed a short sale addendum. Seems to me there are many unanswered questions.
0 votes
Richard Leci…, , Tucson, AZ
Mon May 17, 2010
The bank can ask fora higher amount. The purchase offer is between you and the seller. The bank does not need to honor it in a short sale. I recommend you think about a counter offer and talk with your agent. I wonder how it is that you have had an apprasial already that this point as it was not a done deal. You lender should have known this.
0 votes
Tony Lewis, Agent, Valencia, CA
Mon May 17, 2010
Paulapearle,

You will be unable to purchase this or any home unless the mortgage is satisfied. Your only recourse is to cause problems for the Realtor and Seller. It is my practice to over disclose. There is no road map when dealing with a Short Sale listing. The sale is subject to the seller showing a true hardship and the acceptance is solely in the hand of the lender. It is the lender's discrestion whether or not to let a home sell for less than is owed on the home.

Let me know if you need any help with finding a home in the Santa Clarita Valley,

Tony Lewis
RE/MAX of Valencia
http://www.TonyLewis.com
tonyglewis@yahoo.com
661-510-7975 Cell Direct
Web Reference:  http://www.TonyLewis.com
0 votes
Jacqueline W…, Agent, Irvine, CA
Mon May 17, 2010
Your question can only be answered after a complete review of the RPA and any other documents that have been submitted as part of the contract & so you should probably contact an attorney who specializes in real estate law. However, keep in mind you are trying to buy a short sale....which usually means the seller has a financial hardship and probably no $$, so even if you could technically enforce the sale through the legal process.....who would pay the $24,000?
0 votes
Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Mon May 17, 2010
Paula:

If I am reading your question correctly, an appraisal has been done on the property ("the bank wants $24,000 ... above the Appraisal"). If this is correct, and the property did not appraise for the amount the Short Sale Lender ("SSL") is requesting, then the SSL needs to be made aware of this.

In my experience, if I have a bona fide appraisal below the SSL approval amount, the SSL will reduce their approved price to the appraised price. They realize that if they go through the foreclosure process and then have to sell the home themselves as an REO they will find it difficult, if not impossible, to sell the property for more than the appraised value.

Have your agent write an addendum to the purchase contract indicating that you are willing to pay the appraised value, per the attached appraisal. Then have your agent request that the listing agent present this addendum (with the attached appraisal) to the short sale lender for their consideration and approval. Of course, if the SSL has a higher appraisal, then ask that they show their appraisal to you and then have an appraisal review done by either or both appraisers to settle the difference.

SSLs are already losing a significant amount of money on most short sales. They want to make sure that they are not letting the house go for significantly under market value. An appraisal is one tool by which to determine market value. Get the information to the SSL so they can make an informed decision and Dare to Dream.

Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
0 votes
Bob Georgiou, Agent, Danville, CA
Mon May 17, 2010
Paula,

This certainly creates an issue for someone and I don't necessarily agree with the advice given below is correct within the law but as a practical matter the do agree generally with the characterizations of the other agents. In reality there is little that can be done since the banks are hiding behind federal law and this transaction is constrained by local laws. It could be prohibitively expensive. In my opinion, fighting the seller is losing proposition. If you think there is some recourse, I advise you have an attorey look the matter over. to see if it is worth the effort.
Web Reference:  http://bob2sell.com
0 votes
Susan J Penn,…, Agent, Weston, FL
Mon May 17, 2010
Dear Paula Pearle,

Hi! As a buyer you should have been informed that your offer price can be countered by a bank. The bank is the ultimate decision maker when the price is decided. You should receive a written approval showing the sellers name, the buyers name and the terms of the short sale. You also have to get an appraisal if you have a mortgage to purchase this property and get through with those negotiations. There should be a negotiator who is usually a title company working through this process.

Susan Penn, PA
EWM Realtor
2000 Main Street
Weston, Florida 33326
0 votes
Richard Mals…, , Fresno, CA
Mon May 17, 2010
The short answer is no, you can't force the contract price.

On a short sale, it is ultimately up to the bank as to what the home is going to sell for, or more accurately, how much of a loss they are willing to take. The listing agent and the home owners will decide on an asking price...not the bank. In almost all cases, the bank has not agreed to accept the listed amount, they usually do not even know that the house is up for sale. Only after an offer is submitted does the bank really get involved with the sale of the home...including it's asking price.

Sorry.
0 votes
Amy Warner, Agent, Santa Clarita, CA
Mon May 17, 2010
Hi Paula,
It is not uncommon for a bank to come back with a different approval price from the list price;even when a short sale addendum is signed. Not sure why the listing agent would tell you that if the bank had not approved price yet? If this particular home does not work out, have you thought of using a Buyer's Agent to represent you on the next one? If so, I can help. Please feel free call me with any questions.
Amy Warner
Realty Executives
661-312-1809
0 votes
Neil Mather, Agent, Valencia, CA
Mon May 17, 2010
Dear Paulapearle,
When you submit a Purchase agreement on a short sale, even if the buyers and sellers have signed it, the price and terms are still contingent upon the approval by the bank. They are the ones losing the money and they make the final decision as to what they want to sell it at and if they don't want to put together a deal then they have the right to let it foreclose. Now, a short sale addendum is used to give the banks a certain amount of time to get the short sale approved and it is used to set up certain conditions such as when the deposit check will be put into escrow and when the timeframes will start. A short sale addendum should have been used but even if it wasn't, if the house is upside down and the seller owes more to bank than what it is worth (your offer) then the deal is still contingent upon approval from the bank.
Now there are also instances where the second lienholder might be asking for money and that could be where this whole deal is being held up.
The only thing I can recommend to you is make sure you are working with a really good real estate agent that knows short sales and how to deal with them.

Good luck and feel free to call me with any of your questions.

Neil Mather- THE MATHER TEAM
661-600-2422
License # 01479910
Web Reference:  http://www.MatherTeam.com
0 votes
Steven Ornel…, Agent, Fremont, CA
Mon May 17, 2010
Hi Paulapearle,

This is not a legal opinion:

As you state, all parties recognized the transaction to be a Short Sale; and therefore, subject to lender approval. The Lender is not a party to the purchase contract between Buyer and Seller and they do not have to accept the agreed-to contract terms between Buyer and Seller. So, no, you cannot force the sale.

Best, Steve
0 votes
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