Investor · Washington, DC · Member since 2016 · 51 posts · 14 votes
Hi awesome Real Estate fans,
I have a situation and need advice on what to do. I had signed a Purchase Contract as the Buyer in July 2016 for a short sale condo. I had appointed the Seller's agent as also my agent and signed the disclosure. The closing was stated to be in Oct 2016. The Sellers agent didn't get the short sale approval from the bank so we couldn't close in Oct. Now I received a call from the Seller's agent saying that the Seller has fired her and appointed a new agent. What does this mean for me? Can the Seller do this while under contract? How can I resolve this? My intention is to purchase not to cancel.
Investor · Washington, DC · Member since 2016 · 51 posts · 14 votes
9y
&steven so you think I have no recourse?
Doesn't my contract automatically extend to the new Sellers agent? The old agent hasn't even given me the new agents cell phone or the Sellers phone. How can I find their numbers?
Real Estate Agent · Buena Park, CA · Member since 2016 · 743 posts · 424 votes
9y
This is why every investor needs to have a real estate lawyer on retainer to protect your interests and keep you from getting into trouble.Someone to ask legal questions to and read contracts to make sure they are compliant with the law.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y
Read your contract. It had a closing date. It likely expired on that closing date, assuming it had no type of "automatic extension". Otherwise, if you and the seller didn't both sign an extension to the contract, which is common in short sales that drag out, then the contract is expired....you need to sign a new contract, or better for the process, extend the old one.
JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
9y
I am a real estate lawyer. Not in Washington DC, but these things are fairly similar everywhere.
Did you sign a separate agreement for the listing agent to also be your agent for all transactions, or was that agreement confined to the particular purchase transaction?
Did you agree to pay separate consideration to the agent, or was the agent to receive a percentage of the sales price? Probably the agent was to receive a percentage of the sales price.
In all likelihood you do NOT want to extend the old contract, because it probably also contains the language about paying the former agent. Sign a new contract.
If at all possible, get the old agent to agree to a cancellation of the old contract. Some lenders require an Addendum or "other clause" that effectively negates the "close by" clause, and says closing will take place within 30 days after short sale approval. If you have that language lurking somewhere, you still have a valid and enforceable contract, including agent compensation unless the agent is fired for cause.
I'm just guessing, but if you signed a purchase agreement in July and still did not have short sale approval by October, the agent did not do his/her job properly. What reason were you given for the failure to obtain approval? I typically get approval in 45 to 60 days. A really difficult one might take a little bit longer. The days of incompetent or lazy document processors or negotiators dragging their feet and doing nothing are largely over. Management has systems and reports in place to monitor progress, and employees can't just hide in the mess and chaos like they did shortly after the crash.
Tell the seller you are still interested. Ask the seller to contact the bank and obtain a history of all communications with the prior agent, all non-confidential internal notes, plus a copy of all documents transmitted by the agent and the date of transmittal. The seller should ask the bank WHY the short sale has not yet been approved. Ask if a foreclosure is scheduled. Ask if the file has been transferred to the foreclosure department. More than likely this will provide the evidence you need to indicate the agent did not do the job properly. There are sometimes exceptions, but this way you will know for sure.
If the file has been sent to the foreclosure department, it does not mean a short sale is no longer possible. It just means you must find out what is necessary to put the brakes on the actual foreclosure, or you must work as efficiently as possible to get the short sale approved before the foreclosure date. I've done that many times, because often people don't even hire me until they are racing a foreclosure. It's stressful but usually possible.
Investor · Washington, DC · Member since 2016 · 51 posts · 14 votes
9y
Thanks @Account Closed @Mark Gallagher
Thanks a lot @Denise Evans for a detailed advice.
I actually went on the broker's website which the agent worked for and left a message. The principal broker had jumped in and dug deep into the situation. He replied and explained everything. The agent called and was very upset. Anyhow the agent said she will talk with the Seller to enter into a new contract with me. I'm waiting to see how it goes. She didn't give me the Sellers phone number saying she is not authorized to do so! (I don't know if I should fight her or accept it)
The agent explained that the Seller had not paid her condo fees and therefore incurred more costs than what the bank is ready to accept so the bank has refused the Short Sale and asked for settlement of the condo fees because the condo association is foreclosing.
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
9y
Shortsales can take forever. Sometimes a year or more. There's a lengthy process dealing with the bank so that they will issue a shortsale approval letter. Average is between 30-120 days and depends on the lender. Bank of America can easily take 9 months or longer. I've seen some shortsales take over a year.
Closing days on contracts are +/- 30 days unless there's specific language that states "time is of the essence."
Otherwise, as long as everyone is actively working towards the closing, contract dates are fungible.
Getting the approval letter has less to do with the agent than the bank and their internal process.
