We're the buyers and currently in escrow on a bank approved short sale. We set a close date that both buyer and sellers agreed to, deposited earnest money. We made arrangements to move from Texas to San Diego--hired movers, sold our house, bought plane tickets, and made appointments to have repairs done, etc. A while later the sellers want to change the escrow close date, we said no, now they are threatening to cancel the sale.

The only line that speaks to this in our signed sales contract is about earnest money, which is in the escrow account already.  My real esate agent advises just to concede because otherwise they will cancel. When I ask on what grounds? Wouldn't they be in breach of contract? My realtor says she doesn't know she just "knows they can cancel if they want to." 

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Is there an actual short sale approval letter from the lender?

Your particular state/regional purchase contract/addendum will have specific language about the seller's right to cancel, if any.

Are you only talking about delaying a few days?  It's probably worth it to agree.  Even if the seller is absolutely wrong, you're not going to be able to force them into anything that soon.  Work it out, and enjoy:).

Karen,

      To my understanding the seller can back out of the short sale at any time. We see situations like yours on the daily and some borrowers will kill the deal if they do not get their way.

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It may be time to see legal advice.  Sellers cannot just cancel without any hardship.  I would try to work something out with them and maybe offer them an incentive to move.  Good Luck!

As noted this a short sale. The distressed seller has several ways of canceling this sale not available in a traditional sale.

The request as presented does not seem to be unreasonable. I would not add to the seller distress by saying no.

An approval from the lender does not take away the seller rights as a seller.

I would give them the time they need to vacate before the transaction closes.

I know your feeling. But if you really want the house and everything is over, you better just listen the seller. Just giving them few more weeks, then the house is yours. Not a big deal. Seller can cancel or if they don't sign the paper, the short sale approval will expire anyway. Then they can enjoy some more free renting at the house. At this point, seller has already lost everything but the house. Just patient and be kind to the seller.

 

kyari p--what do you mean "if they don't sign the paper"? Like at closing? They already signed the purchase contract and short sale approval from the bank. 

I just don't appreciate being strong-armed and pushed into a corner. This short-sale system is seriously messed up! Someone hasn't paid their mortgage in 2 years, I am willing to pay market value for their house, the bank is willing to sell it to me and yet somehow the people who haven't made payments in over 2 years are calling the shots?

If there is anything I have learned in this process its that contracts mean basically nothing unless you're willing to sue over breach of contract (nI'm not going to sue, I'm just saying!)

The bank is not "willing to sell to you".  The bank does not own the property. The bank approves the decision of the seller to sell to you and pay them less than what is owed. The seller is driving this train. Yes the bank get to play with the navigations, but they do not own the house.

The fact the seller is distressed and selling as a short sale, has given you the opportunity not the right to put in an offer to purchase this property.

How long this homeowner has lived in this home paying or not able to pay their mortgage is not for you to pass judgement on. The seller is the owner and has all the rights as an owner until the house is sold or foreclosed on.

Your are not being strong armed. You may feel like it but you really are not.

Now if you had put an offer on a house that was owned by a bank, you most likely would be strong-armed.

Ghana, I would hope you wouldn't advise your sellers to drag their feet on their short sell. Their lender is giving the seller's an opportunity to get out of the contract they signed with the lender with minimum damage, it's not a right of the seller to be approved for a short sale.

Karen, I don't know your contract and I'm not an attorney. In our contract the buyer could sue for non performance, but honestly that probably isn't going to help. There are also things the lender may have the seller and buyer sign that does say they can cancel at any time. Maybe you can go back to them and split the difference in the time frame? I hope you can get this resolved quickly, I know it's causing you stress as well.

Hello Pam

A request for a few days in California is not considered dragging ones feet.  I assist and make sure my sellers have a moving day plan in place well before closing. Our buyers are allowed to do their final property walk through with the property vacant before the buyers' loan (if financing) is funded whenever possible. I make sure my sellers are aware of what is expected of them. I also reaffirm that the buyers and their agents understand the nuance of buying this short sale vs a traditional sale prior to accepting an offer.  No need working with a potentially impatient and unreasonable buyer/agent who is not able to handle the short sale transaction obstacle course. In the end my sellers are relieved and the buyers are very happy. All parties are respected and kept informed. 

Not sure what your short sale contract looks like in Florida but here in California our real estate laws pretty much protect the distressed homeowner until the property is no longer theirs.  The person that posted this question is in California. One can sue for whatever one desires. Many people do and loose. Many loose even when they win. 

This is not a matter of being fair or unfair. Lenders seem to be leading the pack on unfairness. This is simply a matter of consideration. Seller asked for a few days to move not a few weeks.

I trust this buyer's agent has already explained this to them. I trust this buyer's agent has the buyer's best interest in mind. Buyer just don't like what they heard.

You are right. A short sale approval is not one of the rights a seller has. It is an opportunity.  One they do not have to take. They have the right to accept the terms of the approval  or not. In this case buyer indicates the approval was accepted.

I'm not sure where you're getting a few days. It's 2 weeks. If it was a few days, then yes, I would agree with you, but 2 weeks is a little much.  Consideration is not only for the distressed party.  Your responses sound like an advertisement to gain seller leads.

"Your responses sound like an advertisement to gain seller leads."

Thanks Pam! That's exactly what I thought too! They had the short sale opportunity and they decided to take it, they signed the purchase contract. No one forced them into it, they agreed to the original close date and I am simply asking they honor their signed contract.

Wow, I sure didnt see an advertisement to gain leads even though that is a HUGE benefit to being on this site.  I thought Ghana was giving some great advice based on her short sale experience.  

Bottom line is that the sellers are not honoring their contract if they are unilaterally extending the closing date.  Why? Who knows. Do you have any recourse? Maybe, maybe not.  If you really want the house then your agent really needs to put some pressure on the sellers agent and you need to also be prepared for plan B.

Highly unlikely that any court of law is going to rule in a buyers favor in a non performace short sale situation and if they did rule in your favor after the short sale approval has expired, what really can be done?

Keep working thru your agent to work it out

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