Short Sale SellersWhat Happens in a Short Sale?
Many times a short sale may fall through due to the 2nd lien holder or a PMI company, wanted more money. But this can also happen quite frequently with the primary lender, as they both play a role in completing a successful short sale.
Here is a scenario:
1) You signed a contract for a “short sale” and the price was listed for $280,000. The seller accepts the price and you put down an earnest deposit showing your interest in purchasing the home. After a month, the seller’s agent calls and says the “PMI” company wants $23,000 more or they won’t sell.
You decline to pay more and after a few more weeks, the earnest money is sent back to you and the house is placed back on the market for $299,000.
You still want the house, but do not want to pay more for it. Since the you and the seller signed the contract, is there a way to purchase the house at the original price?
Answer – A short sale means the buyer is offering less than what is owed on the existing mortgage. To complete a short sale transaction, all the lenders must agree to accept less than what is owed. In this case, the principal lender was willing to accept less, but the 2nd lender was not. Usually the 2nd loan lholder get nothing out of short sales, while the primary lender gets whatever is there. Recently, more 2nd lenders haven’t been willing to just suck it up and lose everything.
The only thing that may help, As weeks go on and the credit crisis deepends, banks and mortgage lenders are being encouraged to clean up the books and get rid of the real estate on it. After a few weeks have passed without an offer, the 2nd mortgage lender may be more receptive to getting the property removed from the books.
As for the contract with the seller, you could talk to a real estate attorney about the issue. Take note, that if the contract stated that the sale was contingent on the seller obtaining the lenders’ permission for the short sale, you won’t be able to force the seller to close.
Although, you could offer to pay a few thousand dollars to get the deal done.