Do you have a short sale addendum signed by both you and the seller? If you do it is stated in line A that "This agreement is contingent upon seller's receipt of written consent from all existing secured lenders and lienholders (short sale lenders)." So long as the seller has not received approval from all lien holders (including the 2nd lender) this contingency is in effect, ergo, your deposit is safe if you decide to walk away from this deal as seller or seller's agent has not delivered what is needed to complete the short sale.
I would also like to point out that you should learn from your mistake of having a listing agent represent you in double agency (represent both buyer and seller). When an agent represents both buyer and seller it is difficult to ascertain where the bulk of his/her loyalties lie as he/she has a feduciary responsibility to both of you. An agent who does this (specially in a short sale) is only asking for trouble. The risk is too great.
Many Buyers think that hiring the listing agent for the sale transaction is an advantage. Actually, it is not. If you need more information call me at 408-316-0793 or email me at email@example.com.
1-STOP Realty Group
900 E. Hamilton Ave. #100
Campbell, CA 95008
The sale can't happen if the second lender doesn't clear title. There are several possibilities; the second may be on title but closed and is only an issue for Title to clear. The second may be another lien like a mechanics lien or tax lien. Title should have caught either of these early on, but again they may be able to clear these and allow you to proceed to closing.
Finally, if it is a conventional second mortgage or HELOC, the agent should have learned this from the seller or a preliminary title search. In most cases the second will settle for a token amount, but the time involved resolving this is another matter.
If the sale fails through no fault of yours, as in the seller's inability to provide a free and clear title, you should be able to retain your earnest money. Your contract will be the final word on the subject, review it yourself and don't rely on your agent's opinion. If you are uncertain, have it reviewed by an outside source, preferably and attorney. I'm sorry you are in this mess.
Buyers do not pay for having agents represent them in a sale. Commissions for agents (both listing and selling) come from the seller. Buyers do not have to pay anything for being represented by an agent. That is why, next time, you should get an experienced agent to represent you - one who knows you should not be charged with a payment for representing you.
Did you check your short sale addendum? IF you have one, your deposit is safe.
If you love the house and have waited this long, don't let this mistake steal your joy from you. Had you been told it wouldn't have made much difference that I can tell. Negotiations for the agent can be more complicated to get both on target, but for the buyer it shouldn't be too much different, especially since you have approvals and just need to get the dates straightened out.
Remember the sellers too; if you pull out they may not get another buyer before one of the banks just decide to foreclose. This would be the worst case for everyone after waiting all this time.
You learned some important lessons about buying homes, short sales and representation. I always recommend having a knowledgeable agent represent you.
Best of luck,
But I hope we get in time . As the first bank has approved the loan n closing of escrow till 29 th feb .
But can we walk out now and get our deposit back as I feel so cheated the agent didn't tell us anything. Nothing when we signed loan docs. This is later when we reading each n every page of loan docs we realized this
Thanks for the update. So the second mortgage may have been a surprise to you, but apparently they have been working on it. I doubt you are looking at anything substantial and believe chances are good they will just extend the amount to a reasonable date to get this closed.
Second's generally get a token amount of what is owed and granting the extra time shouldn't be too difficult. It's really just a processing matter to get a new letter with a later date. I would relax and hope for the best you are almost done.
So the agent is waiting for extension .
Is there any attorney in Burbank , ca that can help me and how much would it cost ?
If there has not been disclosure, you should be able to walk away
Get legal advise
Typically you agree to stay in the contract at least 90 days. After that, either the buyer or seller can leave the contract with written notice. After 120 days, the contract expires unless extended.
You might want to review your contract to see whether something like this is included. BTW, either of those deadlines could have been changed at the time you wrote the offer. Personally, if I am the listing agent I ask for at least 120 rather than 90 days since the banks rarely react in less than 120 days.
Megan Bower, Coldwell Banker
Specializing in the Tampa Bay Area Waterfront
Short sales are frustrating enough without the added layers you are experiencing, and I'm sorry this is happening to you.
Some agents can do a fairly good job of representing both parties, but it is impossible to be equally fair to both parties. The Seller agent has a listing contract with the Seller it states their duties to the Seller. Then when you had them write an offer for you the agency disclosure would have been presented and explained about dual agency. I personally would not have represented both in this situation because in my opinion it is a conflict.
When you write an offer in California on a Short Sale the Short Sale Addendum is strongly recommended. In it the parties agree to timelines, earnest money deposit, etc. Some agents say never deposit money until the Bank approves, but I have represented sellers and buyers separately and I can tell you that more and more agents want to see a buyer put some "teeth" in the offer and deposit something up front. This is because it takes a long time to get an offer approved by the bank and we would want to hold it together for as long as possible.
Since I'm not a party to your contract I can not speak to the way your agent has represented you, the seller, or how things have transpired. I can only speculate that the second bank should have been known before putting the house on the market for sale, unless it was put on somewhere between by the seller. In your disclosures if you received a preliminary title and an updated preliminary title it should have shown all liens involved. The agent should read this and discuss it with the Title Officer and then explain it to their clients. When the agent negotiates the short sale they also have to negotiate the other loans as well.
Now back to your deposit. Your contract and addendum will explain what your course of action may be. Understand that both the Seller and Buyer have to mutually agree to release your money. Any inspections, appraisals, etc. you invested will be your cost.
If the agent has a managing Broker it would be a good time to get them involved and see if an extension from the first loan will be granted. There is still time depending on how far along they are in the negotiations with the second.
All the best to you.
Unfortunately, your case illustrates several issues, that in my opinion are extremely important, and are often overlooked.
First, you need your own agent to represent you. No matter how well intentioned the listing agent, when problems like this one arise, it is almost impossible for the listing agent to do a good job to represent the best interests of both the buyer and the seller. This is particularly true on short sales where this issue often comes up.
Second, On a short sale, you should never put a deposit into escrow, until you have written approval from all of the short sale lienholders. If you have a good and competent agent to represent your interests, your agent will advise you to never put a deposit into escrow until you have written approval from all of the short sale lienholders. If the short sale listing agent will not agree to those terms, then I recommend that you find another property.
Third, there is never any guarantee that you can get your deposit back. Your deposit can only be returned to you, if all parties agree to sign intructions to the party holding your deposit to return your deposit to you, or if an arbitrator or a court orders the party holding your deposit to return your deposit to you.
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org
I am going to check the title and also the short sale ademum to find more
Lien on the property.
As my agent is saying we will loose money if I back out now. Good I checked here so we know now.
We are first time home buyer and didn't know there is a second lien on the property till we signed the loan docs.
How much do broker charge for handling the case ? As our agent and listing agent is the same.
First I have to say your deposit should not have been deposited to escrow until you had full approval which in short. accepted from the bank on both and/or all loans. The seller should of known they had a second loan along with the bank and escrow.An accepted offer in a short sell situation will need to be accepted by you, the seller and the bank (All Parties). The bank may have approved your offer in the first loan, but the LISTING agent needed to inform your agent there was a second. So it really is not your agents fault. Also the Listing may have not been informed by the negotiator for the bank that there was a second or junior loan. You really did not have a FULL approved offer so you can... pull out since this is really not an accepted offer signed by all parties, the second did not sign off. Your agent should let the Listing agent aware of your concerns and if you in fact want to pull out with the return your deposit. If you feel you are not being represented correctly contact a real estate Attorney. But I would give the agents the chance to explain this to you, there is also the option of contact the broker.
Happy Valentine's Day
Denise A. Szyszlo Realtor
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