I thought our offer was solid; full price with the typical 3% seller concession. Inspection went without any major hitches and we asked for some cosmetic fixes. Turns out the seller is jobless and without and extra expense to fix drywall much less buy groceries. Seller needs to SELL!
Appraisal comes in short due to two neighbors dumping their homes a month earlier. With no wiggle room on the sellers side our deal is dead. The sellers options are to apply for the short-sale package and extend the deal for another three months, perhaps six to close. (My buyers are capable of that time frame but would miss the credit.) I thought we were done and we needed to move on.
After a long weekend and a few talks with the listing agent we negotiated a commission drop of .5% and dropped the seller paid concessions to allow the seller to break even at the lower appraised price. During this time frame our appraisal and loan conditions deadline pass, Christmas comes and goes and our closing date is rapidly approaching.
I present amend/extend of closing date; listing agent presents the seller with the 1-800 foreclosure hot line and she decides she doesn't want to sell if we cannot perform by our closing date. Did I mention they want to keep the earnest money too. I thought we were all working towards a common goal. If the seller (no job) decides to re-structure, which typically takes three months, where is the seller gonna end up? What a terrible situation for all parties involved!
I negotiate earnest money release if we don't ask for an extension but will pursue closing on our date. Seller decides to grant extension if she walks away with some money. We, agents, decide to drop our commission another .5% to keep the deal alive and perhaps get a result.
Best case scenario: seller is lucky to have two agents with good intentions. Seller is in a terrible situation and homeless but credit intact. Buyers get their dream home but have a few more a gray hairs.
Worst case scenario: seller has to short sale and credit goes down the tubes (forclose?), listing agent has a short-sale listing after 3 months, buyers lose earnest money and perhaps miss the credit deadline, buyers lose inspection/appraisal money.
Lesson learned: Sellers need to know ALL their options before they list to sell and buyers have to be patient and prepared to all possible outcomes. We need to have a better understanding of this situation since the market is full of short-sales, foreclosures, REO's and unfortunate situations. We need to educate, on all fronts, while working with good intentions and ethics.
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