house dilemma with the sellers

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cutehumor

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I had a contract to close on our first home on 4/30th. Six days before closing, our agent tells us that the sellers do not have 28k to close. The sellers said they are pursuing a bank note or will file a short sale. This home was not advertised as a short sale. The title company attorney wrote a letter to the sellers saying if they did not close, we could sue them for specific performance and damages. The sellers said they are going through a divorce and if we sue them, they will file bankruptcy, and we get nothing. So when 4/30th came, so the seller's signed a two month extension on our contract to close on 6/30th. We also signed a short sale affidavit of arm's length saying we are not trying to defraud the bank or related to the sellers. If we close by 6/30th, we will still get the 8k first time home buyer credit. Well, I was told today, the sellers got denied a bank note and are going to short sale the home. However, our contract expires on 6/30th which a short sale would have to be approved in about 45 days. I've already paid $400 inspection, $400 appraisal, I will be charged mortgage processing fees, possibly buyer agent fees, I will lose the $8k home buyer credit, and I had to move out of my apartment because I gave a 60 day notice to vacate and suffered moving expenses. The seller agent did not go over the seller's finances to get the right price on the home and the title company did not find that the seller was behind in the mortgage until the last week of closing. Do I have any recourse against the seller, seller's agent, or title company?
 
cutehumor said:
I had a contract to close on our first home on 4/30th. Six days before closing, our agent tells us that the sellers do not have 28k to close. The sellers said they are pursuing a bank note or will file a short sale. This home was not advertised as a short sale. The title company attorney wrote a letter to the sellers saying if they did not close, we could sue them for specific performance and damages. The sellers said they are going through a divorce and if we sue them, they will file bankruptcy, and we get nothing. So when 4/30th came, so the seller's signed a two month extension on our contract to close on 6/30th. We also signed a short sale affidavit of arm's length saying we are not trying to defraud the bank or related to the sellers. If we close by 6/30th, we will still get the 8k first time home buyer credit. Well, I was told today, the sellers got denied a bank note and are going to short sale the home. However, our contract expires on 6/30th which a short sale would have to be approved in about 45 days. I've already paid $400 inspection, $400 appraisal, I will be charged mortgage processing fees, possibly buyer agent fees, I will lose the $8k home buyer credit, and I had to move out of my apartment because I gave a 60 day notice to vacate and suffered moving expenses. The seller agent did not go over the seller's finances to get the right price on the home and the title company did not find that the seller was behind in the mortgage until the last week of closing. Do I have any recourse against the seller, seller's agent, or title company?
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Okay, the worst mistake you did was in not hiring YOUR own real estate lawyer.

The next time you buy or sell real estate, hire your own lawyer.

That way, you prevent situations that you are now enduring.

If I were you, I'd walk away from this sale now.

Heck, I would have never gotten into this predicament, because MY real estate lawyer would have alerted me to these looming issues.

The $8,000 (credit) isn't something you'll lose, because it was only something that Uncle Obama promised to give you.

If you need that 8K to buy this hoiuse, don't buy any house.

If you want some of your funds back (which I doubt you'll ever collect), take the sellers to small claims court or hire an attorney to sue them.

Otherwise, get a six month lease somewhere, and start looking for another home.

This one looks as if it won't close anytime soon.
 
You have recourse against the seller, possibly against the seller's agent, most likely not against the title agent. The Seller definitely is responsible but may go bankrupt if you sue them. Seller's agent knew or should have known that the contract price would not cover the liens on the house. As such she/he probably should have made certain that the Seller's had the cash to cover the deficit. I certainly would see how much the Seller's commission is on the deal.

How much is the sales price on the house?
 
Army, while it would certainly be advantageous to hire your own real estate attorney most people don't have that sort of money. One other thing I was thinking is that YOUR agent shares some of the blame for not checking out the debt on the house and insuring that your contract was closeable.
 
jharris352 said:
You have recourse against the seller, possibly against the seller's agent, most likely not against the title agent. The Seller definitely is responsible but may go bankrupt if you sue them. Seller's agent knew or should have known that the contract price would not cover the liens on the house. As such she/he probably should have made certain that the Seller's had the cash to cover the deficit. I certainly would see how much the Seller's commission is on the deal.

How much is the sales price on the house?
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My older sister told me that real estate agents have error and omissions insurance, would that be a viable route? My sister also told me that the sellers agent always sit down with sellers to determine the right price to list the home. She said one of the responsibilities of the seller agent is to have an asking price to cover loan, closing costs, commissions, and give the seller an estimated number at closing. The home was listed at $399.5 and I paid $397.5 and I was told six days before closing that the sellers are still short $28k. The house was appraised for $398k. The real estate agent commission is 3% each, $11925 for the seller agent and $11925 for my buyer agent. My buyer agent said the seller agent listed the home price based only on a comparative market analysis and didn't tell the sellers about their closing costs.
 
army judge said:
Okay, the worst mistake you did was in not hiring YOUR own real estate lawyer.

The next time you buy or sell real estate, hire your own lawyer.

That way, you prevent situations that you are now enduring.

If I were you, I'd walk away from this sale now.

Heck, I would have never gotten into this predicament, because MY real estate lawyer would have alerted me to these looming issues.

The $8,000 (credit) isn't something you'll lose, because it was only something that Uncle Obama promised to give you.

If you need that 8K to buy this hoiuse, don't buy any house.

If you want some of your funds back (which I doubt you'll ever collect), take the sellers to small claims court or hire an attorney to sue them.

Otherwise, get a six month lease somewhere, and start looking for another home.

This one looks as if it won't close anytime soon.
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I actually asked my sister if I needed a real estate lawyer. She is a real estate agent in another city. She said I didn't have to have a lawyer to buy a house. After I told her of all the problems I have had, she said she has never seen or heard anything like what I'm going through. She kept saying it is always the buyers who don't have enough money to close or get cold feet. I was able to get a lease at an apartment nearby. If we don't close on this home by 6/30th, I'll definitely get a real estate lawyer on the next home purchase
 
If your sale goes through I would go after the Selling agent for your out of pocket expenses. The 8k tax credit is not recoverable because you don't have it, you aren't losing anything. Besides the bloodsuckers in Washington will extend it.

For your other expenses though, I would hit up the Selling agent. If your buyer's agent peeps about getting paid look at her like she has lost her mind. She should be lucky you aren't suing her for malpractice. Don't you think it should be a question she asks? "Hey, how much is the loan on this property?" Don't you think before 6 days until closing she should have a title report to consult? That's ridiculous.

Personally I would say the agents didn't do their job. Let them forego their commissions and the Seller can come up with 8k so you can close. If they won't do that hire a lawyer to go after them. THEY didn't do their jobs, the Seller has been negotiating in bad faith, and you are getting stuck. It doesn't take a real estate lawyer to see this, the Agents are just lacks.

PS: I was a Lender for 15 years. I'm not just talking smack about this, I know.
 
jharris352 said:
Army, while it would certainly be advantageous to hire your own real estate attorney most people don't have that sort of money. One other thing I was thinking is that YOUR agent shares some of the blame for not checking out the debt on the house and insuring that your contract was closeable.
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Pound wise, penny foolish.

You're buying a $400K home, for God's sake.

If you can't afford another $2-3K for YOUR lawyer to protect YOUR interests, you may NOT need to BUY a $400K house!!!!

I'm not saying, I'm just saying!
 
That having been said, Army, what do you think about the liability of the Realtors?
 
jharris352 said:
That having been said, Army, what do you think about the liability of the Realtors?
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They're liable in more ways than one.

Problem for the OP is, they're greedy and will vigorously defend.

Realators are ten times more crooked than Democratic congresspeople and used car salesmen scamming phantom cars on CraigsList.
 
I know my agent was super worried. He was calling me everyday trying to smooth things over with us and kept saying he was working hard in our best interests over and over again. When we had the title company lawyer write a letter to the sellers saying that they can be sued for specific performance and for damages. My agent talked to the title company lawyer to see what our conversation was about. My agent said he wanted to know the "talking points" and wanted to be in the loop because he was still my agent. It sounded like he wanted to protect himself and he was sending me emails with "return receipt requested" that he never did before.

If we don't close on 6/30th, we'll probably be out of the real estate market for awhile. This has taken a toll on us emotionally and mentally. Plus, my wife is super picky on houses :angel However, I'm not sure if our mortgage guy and real estate agent would pursue us for their commissions. I doubt it, but I read on real estate forums that some real estate agents were actually suing their customers for lost commission. I'm worried because they know how much assets I have through the mortgage application process.
 
Neither the mortgage broker or your agent would have a claim against you for commissions. They aren't earned until the house is closed and you did nothing to prevent the closing.
 
We actually had to relock twice with our mortgage loan because of the delay in closing from 4/30th to 6/30th. Our mortgage guy did say over the phone that to relock again was at no cost to me, but he didn't put it in writing. Our mortgage guy did offer to throw out our appraisal fee if we buy another house, but were not ready to go house hunting again. In our situation where the sellers won't close, do lenders bill the appraisal and mortgage processing charges to the buyer?
 
Appraisals are usually paid by the buyers. Processing and all other fees are paid on closing and are not due if you don't close.
 
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