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I put down $1000 and have a ratified contract for short sale. 4 months have past and we are still waiting for bank approval. Yesterday the seller asked to release them from contract so they can list as a regular property (for an extra 40k). As the buyer I said no, I will only drop out with bank refusal.

Can the seller get out of a contract? Hoping someone has been through the short sale process and can give some advice.

(My broker thinks they can't but needs to confirm with his office.)

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Many states allows the seller to cancel at any time. It depends on the terms of the contract and your State.

I had a seller send me a cancellation addendum once and we never signed it and still closed on the sale.

edit- this was not unlike George Costanza's girlfriend rejecting his break up attempt. 

Based on a careful reading of your contract and knowledge of your states laws I would say maybe.

What is the end point for bank approval on the contract or is that open ended indefinitely?  If so that seller was a fool and yes you probably can still hold them to contract, that is if it is valid.  If I were the seller I would be bringing the contract to a lawyer now to find any other escape clause or just start changing the property so you don't want it any more.  Be on the watch...

You may as well give it up. All the seller needs to do is call the bank and say that they are looking to do a normal sale now and the bank thinks they can succeed. The bank will reject the short sale if they are looking at getting the full value of the loan from the seller.

Your only chance of it going through is if the bank approves before they tell the bank.

chibimike said:   You may as well give it up. All the seller needs to do is call the bank and say that they are looking to do a normal sale now and the bank thinks they can succeed. The bank will reject the short sale if they are looking at getting the full value of the loan from the seller.

 

  Frankly, I'm surprised that the seller didn't go through this route and make the bank look like the bad guy.  Sorry, they didn't approve the sale, good luck with your search.

chibimike said:   You may as well give it up. All the seller needs to do is call the bank and say that they are looking to do a normal sale now and the bank thinks they can succeed. The bank will reject the short sale if they are looking at getting the full value of the loan from the seller.

Your only chance of it going through is if the bank approves before they tell the bank.
 

  "Your only chance of it going through is if the bank approves before they tell the bank."....lol

Tell the seller to return your $1000 plus another $5000 and you will walk away.

pohnl said:   Tell the seller to return your $1000 plus another $5000 and you will walk away.
  
They were trying to do a short sale, they probably don't have the money. And if they did have the money, the short sale probably wouldn't have been approved anyway. 

As others have said, you have to read your contract and see what dates are in there. Once those dates expire, without an extension, the contract could be dead. While you could just not agree and try to stick it out, I don't think there's too much to be gained here, you should just get your 1k back and move on. Only about 1/3 of short sales go through anyway, and if the market has improved since, it doesn't sound like you had a good chance of an approval anyway, depending on the stage you're all, the bank probably still needs to send out an appraiser or get a BPO done and once they do that, all they have to do is talk to the homeowner and bingo, the bank will want 40k more to approve the sale or rather whatever is left on the loan. 

Depending on the State you live in, yes the seller can back out. As part of the Short-sale agreement disclosure, signed by seller & buyer, the Bank must approve the SSale and then the seller must agree to the terms. If the seller does not agree to the terms then the sale can not proceed. This is how is rolls in CA.

I would have dropped you after 2 weeks. 4 months to get "approval" something stinks about your credit and financial resources.

dmlavigne1 said:   I would have dropped you after 2 weeks. 4 months to get "approval" something stinks about your credit and financial resources.
  Did you read the OP?  Short sale...means the mortgage bank is deciding if they'll let the owner sell it at the bank's loss.  This has nothing to do with elptrainerny's capability to obtain financing!

As to the OP, as others have said, the seller can't just cancel the contract, but they only need to inform the bank they believe they can sell for more than the mortgage amount, and the bank will deny the short sale.  That said...the seller and agent may not be that smart, so just respond no and wait & see.

The bank has no desire to close the sale.  As soon as it happens, they have to quit carrying the inflated value of the house on their books and record the sales price, taking a hit.  Your only chance consists of:

1. Telling the seller that your offer is the best he can get.
2. Convincing the bank that the offer is the best they'll get.

Good luck.

Every house I have bought or sold has had a date that escrow must close by. If it's past that date and you're the reason, then you are in breach. 

dmlavigne1 said:   I would have dropped you after 2 weeks. 4 months to get "approval" something stinks about your credit and financial resources.
  The only thing that stinks is your reading comprehension....although, given your avatar, it's understandable.

StevenColorado said:   The bank has no desire to close the sale.  As soon as it happens, they have to quit carrying the inflated value of the house on their books and record the sales price, taking a hit.  Your only chance consists of:

1. Telling the seller that your offer is the best he can get.
2. Convincing the bank that the offer is the best they'll get.

Good luck.

  

Good luck convincing the bank or the seller.  Hope you look good in blue because you can talk till you are blue in the face and doubt it will do any good.    

Also, since you put the 1k down, you should  be able to easily recover that from the folks who are holding it in escrow.  The seller does not (in any state I am aware of) have the earnest money.  Usually the listing agent's firm is holding the deposit in an escrow account, IIRC.

 

Ok, I was wrong. I thought the OP was waiting for his bank. Either way, if the property is valued at 40K more why would the bank ever go through with it?



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