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What I find unethical about this is that they ACCEPTED our offer of $99.5K three weeks ago, with the thought that they would later push us up higher later on. I would have preferred that they had just countered us immediately after our offer of $99.5K or just had it listed at $110K in the first place.
That acceptance was no doubt contingent upon a third party ( the insurer's) approval.
While you doubt that it happened, I don't! He actually TOLD our Realtor that he thought we would come up higher from the beginning. Now, I JUST (just minutes ago) found out that they DID have a PMI rejection before us, so they KNEW what was and wasn't going to fly with them!
I'm not doubting anything you said. Just reacting to the comments as I read them.
And my congratulations on getting the house. Buying with equity built in is an achievement in today's market, not to mention actually closing on a short sale.
That acceptance was no doubt contingent upon a third party ( the insurer's) approval.
Good point. If the acceptance the OP mentioned for $99.5K was from the owner/seller of the house, then the bank must also approve as a contingency, and could very well ask for a higher price to give their approval. This happens all the time with short sales.
That acceptance was no doubt contingent upon a third party ( the insurer's) approval.
I know that is the case. I wish somebody had pointed that out to us. Then it would not have been such a surprise.
I'd like to thank everybody again on their input. Being a first time home buyer comes with a lot of "huh?" moments and I'll look back on this as a learning experience.
This post was a learning experience for me. I had no idea that the PMI company could reject the offer once the bank had accepted it. All the short sale offers I've seen have been contingent upon banks approval, but that's all. However, the banks always have a multipage addendum, and since I'm not an agent, I haven't had any reason to read those in full. I'm sure somewhere in all that wall of text, it must say something about being subject to approval by a PMI company. I never would have even thought of that as a possibility.
This is why these forums are so great.
To the OP, I must say when I read your initial post, my first thought was that you had misunderstood. I've never heard of the bank approving a short sale within a day. I figured the seller had accepted it, and then the bank came back a few weeks later and rejected it. Many short sale buyers get confused by this process. But I see you were correct, and I am amazed. Despite your difficulty, I must congratulate you on the fast process.
And yes, it is very common, and very annoying, that short sale properties are listed below the price the bank will actually accept. The main reason for this is that the listing agents usually have no idea what the bank WILL accept until an offer comes in. The banks just don't make that information available.
I do believe most short sales we see involve a 1st & 2nd lender who were used to avoid PMI. Until PMI was allowed to be a tax deduction most people tried to avoid and this is why so many 2nd lien lenders have gone out of business.
Seems like just in the last year or 2 has PMI come back as part of the loan equation.
If it needed to be approved by the PMI company; it seems like you didn't have a contract to begin with. You should have waited for their approval before doing the inspection. If this was a real honest business, we wouldn't be where we are today.
If it needed to be approved by the PMI company; it seems like you didn't have a contract to begin with. You should have waited for their approval before doing the inspection. If this was a real honest business, we wouldn't be where we are today.
Short sale contract is a contract between buyer and seller.
The contract is contingent upon third party acceptance.
It is certainly a contract.
Getting into a short sale is not for everyone. There is no commonly recognized path to consummation of the transaction, so risk is much higher than in typical sales.
One huge risk factor is the fact that lenders are brought into the proceedings and owe nothing to anybody involved. They have no duty to any party to respond, to act with any recognized ethical behavior, or within any legal framework that describes the process.
If one cannot hack the risk, one should avoid the short sale arena.
It is a contract to buy something from someone, who it does not belong too.
I bought a home from WFC earlier this year and they left themselves an out in the sales contract. "Subject to upper managmenet approval." It was an REO, and we did close on time. But, it was in the contract, that they could back out and not incur any penalties. However, If I didn't close on time; it would cost me 75 per day.
It is a contract to buy something from someone, who it does not belong too.
I bought a home from WFC earlier this year and they left themselves an out in the sales contract. "Subject to upper managmenet approval." It was an REO, and we did close on time. But, it was in the contract, that they could back out and not incur any penalties. However, If I didn't close on time; it would cost me 75 per day.
You made the contract. You didn't have to.
Actually, the homeowner in the short sale very much DOES own the property. They have the deed.
The wrinkle is, they cannot convey a clear title. And the parties contract that the lien holder will approve the sale and allow clear title to pass.
It is definitely a contract.
Almost every contract has some form of unique circumstances.
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