seller wants $3000 cash to close .. isnt this illegal?

okay we are now 2 weeks from closing but the problems continue.

Seller is expecting to receive $3000 moving money even though they did not qualify for the HAFA program.  They were emailed about this months ago by the negotiator (i was copied on it).  They are stating they will not close without it.

isnt it illegal for me (the buyer) or the broker to agree to give them cash to close the deal?

what say you???

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Arod - After sleeping on this, I think this is strange that this would come up at this time. I think maybe the $3200 that the listing agent was charging you, he promised to give the seller 3k. I bet he went back to the seller and said that he no longer can honor the 3k he promised them as his commissions got cut or whatever lie he told the sellers. So now the sellers are saying that they will not close without the 3k. Since you are a principal in this transaction, I suggest you speak with the seller directly and ask what happened and what was promised and by whom.

Also, how much are you paying for this house? 320k?

Satar, my husband and a couple of ppl familiar with the situation suspect the same thing...that the money he was trying to get on the bogus fee he had somehow promised them.  it seems like a strange coincidence that we are back at having a problem with $3000 dollars...right after he agreed to cancel the fee.  ( the prior amount was actually for $3000 not $3200 .. i wrote that in case that shady realtor trolls these boards. )

I don't think the realtor meant for me to find out about this new wrinkle b/c it was the seller that inadvertently told me when i texted her to confirm closing date.  when i emailed the realtor he would only say 'they are making a false claim' about why they were expecting $3000 dollars. hmmmmm.    i hate to be a conspiracy theorist but what a strange coincidence huh? oh yeah and agent mentioned it would be silly to  make a fuss over $3k. ha! i wanted to say, well it wasn't silly a few days ago when you were trying to stick me with the bogus fee. 

 

I'm torn about contacting the sellers direct....don't know that i want to open that door right now.  i'm going to wait a few days to see if title can get it resolved. the sellers were hostile at first about losing their home and only softened recently (and were civil to me) because they wanted to ask me a [HUGE] favor. they want to stay in the house for a few days post closing so they can get their affairs in order. EEEKKKK! i hedged and really wanted to shout NO WAY but in the end i agreed b/c i wanted to play nice.  (famous last words eh?). we still havent drafted the post-occupancy agreement but i suspect we'll have issues there too since i want a hefty security deposit.     sheesh... really. are all shortsales this difficult?   

and to answer your question: bank agreed to sale price of $380k.  plus i have to pay $2800 to get seller loan forgiveness. 

As a listing agent of short sales and one who negotiates them for other agents, I can tell you that everything you have mentioned so far I have seen. So what you consider difficult, I consider normal. ;)  Hopefully at 380k, it is a great price!

Here is what I would do:

1. On Monday, forward the e-mail from listing agent about removing the 3k to title and have them update the HUD. Tell them to send you an updated HUD with the charge removed. Once the charge is removed, carry onto step 2.

2. Talk to the sellers. See what is their expectations and how they got that expectation. Mainly the 3k.

3. If the sellers said the real estate agent promised them 3k and then recently contacted them and said no, then write an e-mail to the agent stating the following:

A. Put in writing the conversation you had with the sellers and inform the agent that he should honor his word or there could be issues with the sellers leaving.State that he hopes he understands especially 3k is nothing to fuss over for someone of his caliber, but means a lot for someone who is down on their luck, like his clients.

B. Ask the listing agent to find the sellers a rental and get them locked in to move after you close. As a negotiation tool, you can offer to pay for a moving truck. The moving truck should arrive the day after the transaction closes. That way the sellers have someone helping them move and gets them out of the property.

C. Explain how if the sellers do not leave, it will be bad for all of you as if you have to evict the sellers and/or if they damage the place before they leave because they are upset over the promises the agent made, you will recover your costs. Explain how it's in everyone's best interests to make sure they vacate the property immediately after closing without damaging the property.

4. Do not let the sellers stay past closing. It always ends up badly. Instead, help them move. The moving truck saves so many potential issues from happening.

5. You might want to negotiate the appliances. Since it will cost you a lot of money to replace and they won't get full value out of it, you might want to work something out. Plus they can use the money and you can further negotiate it by saying that when they give you the keys, you will give them the money.

6. Make sure the $2800 shows as a payment towards the lien holder on the HUD.

The reason why I asked for purchase price is because I am trying to see how much commission is at stake here. The listing agent is making just over 11k plus whatever he is getting from the other agent in his office after paying broker fees.

Good luck. Do not be nice and get everything done upfront. Negotiate everything in your favor or you will find yourself evicting the sellers and walking into a damaged property with everything stripped out of it.

Satar Naghshineh:  thank you for your help@!! really, you help me open my eyes and better understand this very difficult process! as an agent and a consumer your help is invaluable.

a couple of points to clarify/consider:

1. agent has about $23k at stake in commissions (minus whatever he has to split with his brokerage...not sure if he's tossing anything to the other agent who has been in name only.)

2. on monday i'm def hiring an attorney. i've worked with them for years and trust that they can at least fight with the title attorney (who is in bed with the shady realtor) and make sure my HUD is clean. and i can always use the 'well my attorney advised against it' reasoning.

3. Like you suggest i will talk to sellers and see where their idea of the $3000 for moving expenses was borne....

4.  AND THE BIGGEST ISSUE is the post-occupancy problem. i had such a terrible gut feeling about it and my husband was dead set against it and you have really cinched it for me. now after more or less agreeing to it (verbally) i need to back out of it and fast! this is not going to gain me any favor with these sellers. they were so hostile they almost didnt let me on the property the day of the appraisal a few weeks back.

but they are smart... b/c a week ago during inspection they totally schmoozed me ..rolling out the red carpet and giving me so much helpful info on the house...the lawn guys number, pest control, pool guy, etc...walking me around pointing things out...and even showed me all their moving quotes!  

which brings up another point that you mentioned.. you advised paying their moving van and normally i'd think that is a STELLAR IDEA however their quotes were between $4k - $6k!!  that's A LOT OF MONEY.  they admitted they found another house to buy (about 4 hours away) but need to close on this one first. which is why they want to stay a few days post-closing or else they are forced to rent a hotel and pay for furniture storage and essentially do 2 moves. i sympathize with their situation but i just know this is going to turn out badly for us.  

thank you for talking some sense into me!! sometimes when you are too close to a situation you lose sight of reality.

i like the cash for keys idea you bring up. 

you mention that the moving truck should arrive the day AFTER they close. shouldnt they be moved out the DAY OF CLOSING?  perhaps its different in your region but it is customary here to do the final walk through inspection a few hours before closing then get keys AT CLOSING and walk into your new house. so they should be moved out day before right? just making sure i'm not missing something here....

1. Even more negotiating power for you. However, be polite and a politician. If you come off as being rude or crass, it might make things difficult. I have seen people walk away from so much money simply because they didn't like working with the person on the other end.

2. This attorney concept seems amusing to me. You have a real estate agent, an attorney and a title company. To top it off, you guys meet at one location and sign paperwork together.Wait till you do a transaction in a state like California. It's easier than buying furniture or a car.

3. Great. One aspect of negotiating is understanding the problem and using the information to your advantage.

4. Explain to them that you have to leave your place sooner than you thought. The moving van seems expensive. it costs around 1k here for an hour's drive. Maybe offer to pay for part of it. With the 3k, plus your 1k contribution and whatever you negotiate for the appliances, it might work. I smell BS about their other house they are going to buy. How can they qualify for a new house when they are in foreclosure? I think the only reason why you know about the moving quotes was that they were trying to hint to you that they wanted you to pay them. Like I said, the listing agent is smart about short sales. If these were my clients, I would teach them the same tricks. In fact, I would tell you about the fixtures and appliances I will be taking so I can negotiate this with you. Ask for the new address so you can forward them any mail and so you can send them a home warming gift or thank you basket then see if that house is for sale and if the sellers are the buyers.

The only reason why I said day after closing is to re-assure them that you will close. A common fear for sellers is that they move out and the buyer ends up not closing. Then the sellers are upset cause they could have stayed at their home for free some more. Let them know that's why you are giving them a day so they can be sure you will close.

When you buy a house, there are 3 major factors that come to play:credit score, debt to income ratio and loan to value. I am sure their credit is shot. If they have the money for the down payment, then they wouldn't make such an emphasis on 3k or needing more time.

I say it is legal for the moving truck because it takes place after the transaction closes and is not contingent to the transaction. In other words, there is no assurance that you will pay for the moving truck nor do they have any recourse against the transfer of the property. However, like Bryant points out. I am not an attorney nor do I play one on TV.  ;)

Regarding changing the moving out date, I would stick with your personal hardship as they can't refute it. In fact, let them know all the expenses you already have incurred to purchase the property. If you use the lawyer reason, then you have less negotiating power because they can refute the information given to you and it puts you in a position that you want to honor your word, but a 3rd party is blocking you. So if they find a solution to the 3rd party, you are left to honor your word. 

1. Agreed. Their next thing they will tell you is that they need more time because they haven't closed on their new home yet. It will eventually turn into eviction.

2. We have no standards in our state. Basically buyer and seller can agree to whatever terms they want. I do admit that I haven't seen one which asked the seller to handover access to the premises before close of the transaction.

It's fine what you and buyer agree to regarding storage or whatever.

3. This will be difficult as I do not what was said between you two. You basically need to put the reason for the early occupancy on recent personal developments that are forcing you to negate on your promise. Like I said, if you use the lawyer as the escape goat, you will lose if they provide you with a solution. If anything the lawyer is just another reason why you can't let them stay, not a primary reason. He's your ace.

Right now, you need to deal with the 3k charge on the HUD and the seller's 3k first. You also need the listing agent's help in having him explain to the sellers the need for them to leave and to help them find a place or refer them to an agent in their new area. Buy yourself some time for now. Say something along the lines of  "Sorry for the delay in getting back to you. Something has come up that might affect my move out date as well. I will know more by Wednesday. If something changes, I will personally meet with you this week and come up with a solution that will work for the both of us. Also, I might have to buy appliances. Are you guys willing to sell me your stove, fridge, dishwasher?"

The new house is BS. If anything it is a rental.

You need to resolve the 3k charge on title first, then the 3k to sellers second and finally the move out. Do it in this order. I bet you will be so much happier when this is over!

By the way, when you buy a new construction, it comes with appliances. So why are they telling you that they are taking them?  ;)

yup. i figured they were going to sell them since originally i didnt want to buy them. so naturally i've been trolling craigslist...lol

UPDATE 4-23-12: hi satar, all hell broke loose this morning. lol. a flurry of emails and accusations. the sellers sent an email and copied everyone on how the agent had lied to them during his sales pitch about receiving $3k at closing and how he told them all his clients always received cash at closing.    

so it turns out the $3k the shady realtor was charging me is what he was promising them.

i did as you advised and wrote him a diplomatic email telling agent to make it right with them and honor his word. he wrote back saying he couldnt even if he wanted to. i replied with saying that he was a very successful agent and i'm sure he could find a legal way to do so. 

also, as i suspected he gave me a very hard time about submitting my inspection report for credit, saying i would delay the closing and sellers could come after me, etc.. i told him to do it anyway. let's see if he does. 

 

Hi Arod - So everything is as we suspected. Great. Stay focused.

1. Let the real estate agent know to run the repair costs with the negotiator just to see if the negotiator can give you credit or lower the purchase price. Say you understand his concerns but you want to make an informal attempt to further negotiate this in your favor without demanding it or requiring that we start all over with the short sale.

2. Good job with the e-mail to real estate agent about the 3k for the sellers. Now stay out of the way for now and let him deal with it on his own. You do not want to apply too much pressure as he might snap as well.

Get some sleep and let these idiots dual over their issues for today and followup with them tomorrow. It looks like the sellers were told that they weren't going to get 3k and now it looks like they can't stay the extra week. They are frightened. If you do communicate to them, be positive about the agent. Say something like "I am sure agent will keep his word to you. After all, he is making 20k on this transaction and he seems like such a nice and honorable person. I will also see what my situation is and see where we can help each other. It looks like I do need to get some appliances. Do you still have any available?"

Be a politician and it will work out for you.

Update: 4-24-12   hi satar, yes, everything is as we suspected.  i took your advice and got some sleep last night.. slept like the dead! lol

it appears we are at a stalemate...each side threatening not to close to see who will cave in first.

the seller suggested the broker buy the spa for $3k and gift it to us at closing. the shady broker is now claiming he's not allowed to buy anything from them.   however, i have several emails from him from early on trying to get me to buy their appliances. if i can purchase their appliances why can't he?

 

also, shady broker emailed me trying to see if i was the one who suggested the spa purchase (i guess to implicate me).  i told him that i hope he can work it out with the sellers but that my lawyer has advised me to stay out of it and for him to work it out with the seller directly 

should i continue to stay out of it and let them work it out? i think both sides will hold their ground and see who cracks first. meanwhile, should i alert sellers that i can't do post-occupancy? i don't want to put so much on them at once but i also want to give them enough time to plan for this.

what say you? 

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