Can the seller stop the short sale right befor it goes to investor for approval??
We've been in the process of buying a short sale for the past 3.5 months. We just got a counter offer front the bank 2 days ago, which we accepted, and its about to go for final approval from the investor. We got an email form the sellers agent, who is also our agent, that the buyer is trying to modify his loan and has asked the forclosure department of B of A to stop the short sale. This is a supper jumbo loan and our offer is the only one on the table right now. I know he owes about 300k more than the house is worth and there is an 82k outstanding property tax.
So can the seller just ask the bank to stop the short sale??
Replies to This Discussion
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Permalink Reply by Bryant Tutas on
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The seller can stop the short sale process at any time up to closing. As can the buyer. The real question is what is the seller's contractual obligation to you? The answer lies within your purchase contract. Normally there will be a short sale contingency in the contract or as a separate addendum. That where the answer to your question is.
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Permalink Reply by Valerie Pressley on
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Bryant is absolutely right. There should be a short sale addendum of some sort. In our contracts, there is a date by which the short sale must be approved or either party has the right to terminate the contract upon written notice. If that date hasn't arrived, you still have a binding contract.
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Permalink Reply by Gary Johansen on
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Boy that clause should assign the benefit, something along the lines of – this clause is for the benefit of the buyer(s) – to stop seller abuse. If a seller wants out of the contract, all they would have to do is refuse to supply the bank with requested doc;s until the date past.
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Permalink Reply by Jim Stewart on
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In our area the short sale addendum says the buyer can walk at any time but says nothing about the seller. I tell sellers that once they sign they are bound to the contract unless the short sale is rejected or the buyer walks.
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Permalink Reply by Enrique Vasquez-Plaza on
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Unfortunately for you (buyer) and considering and understandIng that the seller is the one loosIng the house and the one in vulnerable position, the answer IS YES. They can cancel at anytime!
Not cool
For you buyer.
Imagine for us that make a living out of it!
Any additional comments about how sucky this situation is will not help the issue so I refrain to do so.
Take care!
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Permalink Reply by Magda Robles,CRS, CDPE, SFR on
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The homeowner is the only one who sells a home as transfering right to a deed. Sellers could stop the short sale, which means Seller will be defaulting the Contract and there is a clause in your contract of mutual obligations to abide. The Contract to Sell is still a legal document with an additional Short Sale addendum that specifies the timeframe of validity of such contract. Same goes for buyers. They are under contract and they can walk away ? yes but also have their obligations to comply and can be suitable for damages if the other party wish to pursue it.
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"Counter offer from the Bank." Which means the original offer that was submitted is subject to Seller approval of the counter, right? Seller still "owns" the house and has to agree to the counter offer. If you have an uncooperative Seller or the Seller changes their mind and wants to pursue other actions you are basically done. They still have to sign any approval letter which again they can decide they don't want to sign.
I'd say at this point you need to withdraw the offer and move on or at least threaten to. If there is a NOD you might be able to compel the Seller to do the deal, since its most likely another offer might not be accepted since they Sellers are uncooperative, the Servicer might/may foreclose.
Good Luck.
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Thank you all for all the info. I did talk to the seller, he said since the short sale has been taking so long he doesn't think its gonna go through. This whole time he has been trying to get his loan modified, he said they asked him for more document, so he thinks the bank is going to modify his loan. He has not been living in the hose for a while now and he has no income to show he can support the new payments. He said his brother in law just finished med school and is going to help him with the payment. LOL
I really don't think this guy knows what he is doing.
BTW he did sign the counter offer on thursday and on friday he talked to the bank and asked them to stop the short sale.
The hose was supposed to go into auction feb 1st and the only reason it got extended was bec of our offer on the house
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Permalink Reply by Satar Naghshineh on
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No matter what the contract says, the seller can pull out at anytime and here's why, they are usually broke! So, even if you could sue for any damages, you will get nothing from them!
The reason why the loan mod will fail is because he has no income, even if his brother will make the payments. What I would look out for is to see if he will cancel the listing so he can short sale it to his family member instead of you.
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Having closed a few ss and working on a couple more as the listing agent, my experiences has been plenty in manyyyy situations. Sellers can cancel at any time prior to an approval with no problem but if the home is in an escrow with earnest deposit deposited into that escrow, mutual agreement to cancel is a must as it is without a deposit in an escrow, you really dont have an escrow. Some challenge that, but without mula??? Ssa stipulates deposit within 3 days of ss approval here in california. Buyers have rights to cancel per ssa, now sticky part is if buyer cancels after receiving a ss approval, lets hope good reason as a seller has rights to force the sale and whoop there ya go as a buyer can a seller under certain circumstances... I always print reading material for both seller and buyer so they fully understand the process. Plus suggest they speak to an attorney and do their research ontop of whats provided as again I have seen many situations that we would think is ok and it is not. While I am a licensed Realtor and am sfr certified, I am not an attorney... All I can suggest is do home work and know how it works. Great homes on ss and some can take a long time. I have had 38 days from start to close up to 3.5 months total. Be patient as they can be worth it. Much more details to list. Just hope the little info here helps. Take care.
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