Short sale approved, escrow opened, 10 days prior to close and seller called bank to cancel short sale. He will re-instate.

Usually when I think about a case like this I think... "Well, probably they didn't even explain the seller his other options to save his home".

 

Well, I assist the seller obtain his loan modification back in early 2010 (payment went from 2200 to 1300).  Then instead of signing it, he called me to do a short sale due to the fact he is getting divorce from the wife, and he wants to get rid of it.  After explaining the consequences, he insists short sale is best.  We waited some time, and then we started the process.  Wife agree.

 

Now, after I was hired to list the property, obtained a qualified buyer, got the short sale approved, opened escrow and being 10 days away from closing escrow, he calls the bank and cancels short sale.

 

He mentioned it to me, and I told him is a valid intention -since I believe is his right to save his home despite me looking like Ive being taken for a ride...- but to inform himself to avoid possible legal issues or possible liabilities not from me but from the buyer... (never threatened him)

 

Now, negotiator emailed me to let me know he called and cancelled.  He has being always a good client and has a good relationship with me, however as soon as I informed him of the short sale approval, he became unresponsive and uncooperative .  

 

Buyer has obtained financing; paid for her appraisal, for her inspection report and it was ready to close, but now this happen.   In the meantime, he is not returning my call.

 

If anybody has a suggestions I would greatly appreciate it.

Thanks!

 

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I am sorry but the way I read this post was that the buyer is being difficult, not the seller. I believe that the reason this is confusing is that Mr David Altuzarra   is calling the buyer "an investor".  It sound like the poster is not talking about  the bank's investors nor seller 

Enrique,

This happened to me just recently..  Usually I avoid all short sale but I couldn't avoid this client, my buyer wanted to go with short sale property. The sellers were not cooperating at all and just 4 days before the closing they decided not to sell the property and got a lawyer who told them that he can stop the foreclosure!  My client waited for 4 months to close this deal and paid for appraisal & inspection fees (total over $1000) and not only that if you consider what my buyers have lost is thousands of dollars-this transaction started in Oct.2010.. if the buyer purchased other property in Oct/Nov the interest rate  was 4.375% fixed 30yrs with no points and could close the deal in 30 days.  Now we have to start   all over again and now interest rate is 5%!!  my client , buyer got the loan from BOA/conv. and the seller loan is from BOA/FHA but got no help neither short sale dept nor loan dept.  I think the bank should  tell the seller there is no more turning back once it is approved.

my case, the sellers know exactly what they were doing and they used the agents and buyers to drag the foreclosure process to delay while they live there for free of mortgage for years and now more free years! . oh, this sellers are going thru divorce too to get the SS approval. they were denied for loan mod.  I think they are total fraud. They know how to abuse the system very well. It's a free ride for them.  this sellers like yours when they got SS approval in 2 months they were not very happy.  they thought it can take for several months. they went on vacation so they couldn't sign the doc on time either. they can't pay mortgage but they have money for vacation.  Another week either wife or husband was out  or something.  every week is different excuses to sign something. They knew the approval said the approval is good until May so they don't want to sell the property until May! The Buyer was ready to close in less than 30 days which was in Feb.  And last, they have no indication of moving out either ! (I heard some sellers do not move out for months even after closed of escrow).  My buyer don't want to take a legal action against this sellers so nothing I could do but move on.. And I don't want to be part of it either. 

I went to a few short sale seminars last year (BOA and Wells Fargo) I heard how the banks are going to make the shortsale transaction easier for agents and clients and they said next few years going to be short sale market..  I don't know how are the banks & govt.  going to prevent this kind of situation before wasting time and money.

I don't have any suggestions but I think we all agents must report to CAR and HUD. I know there are more sellers like this everywhere now and there will be more every day. there should be some consequences for these sellers who fail to complete the transaction.    I know other countries if the seller fail/cancel the transaction they have to pay twice of deposit to the buyer and no need to get seller signature to release the deposit fund either because it was already in the original contract if the seller do not cooperate in timely manner.

Thanks for sharing your case. 

 

 

Thom above gave good advice.It happened to me but was not my listing but the Seller filed bankruptcy and did not inform anyone. I had the buyer. Selling agent was clueless as well. So immediately the company (pros) handling the deal canceled the short sale. The Buyer was of course not happy with the wait, and time and it seems no (pro company) one quite knew that the trustee could approve the short sale. That happened with the trustee approval. It all went well, but being so close to the redemption period, we were under the gun and lost a few months or so. It just surprised me that the company handling the SS did not offer that as an option to the seller intially which could have saved time etc. The approval came alright after the redemption period a day late and a dollar short. I now in advance, provide a document which stipulates that if the seller is considering or is to file bankruptcy, please advise accordingly as they should be held accountable for listing fees just as with any other contract. And it is very important to see if they are using Bankruptcy as leverage to buy time if for nothing else, and if they have been denied loan modifications. Short sales are such a fertile ground for litigious action, sometimes it makes you wonder if your help to help is helpful period! And I guess specific performance goes out the window legally? Buyers rights? aye yi yi!

Damon has it correct. My concern is that in AZ the listing agent contracts with the buyers agent through the MLS listing sheet to pay a fixed  $ or % commission. We are not allowed to qualify that amount, nor are we allowed to negotiate commissions within a contract.

So, my legal question need to get answered is, if after the lender approves the sale and the buyer agrees with the lenders approval terms, the seller backs out, is the listing agent going to owe the buyers agent the agreed on commission?

Bill, I understand what you are saying but if there is not sale closed, there is no commission to pay the buyers agent.  Agents are not party to the contract, the agents have an MLS agreement that specifies the commission to be paid when the sale closes, in this case the sale has not closed.  Now if the listing agent were to be paid thru a lawsuit for commission earned, the buyers agent would be entitled to get paid also.

Bill Travis said:

Damon has it correct. My concern is that in AZ the listing agent contracts with the buyers agent through the MLS listing sheet to pay a fixed  $ or % commission. We are not allowed to qualify that amount, nor are we allowed to negotiate commissions within a contract.

So, my legal question need to get answered is, if after the lender approves the sale and the buyer agrees with the lenders approval terms, the seller backs out, is the listing agent going to owe the buyers agent the agreed on commission?

Thanks Jeff, I understand.

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