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My husband and I are currently in the process of purchasing a home in a short sale. Our offer was accepted by the seller and his bank on the same day we submitted it. That was three weeks ago. Now, TODAY, we find out that the sellers PMI company is rejecting the price. Apparently, he owes $38K more than our accepted offer. The PMI company is demanding an extra $10K from us or no deal. The worst part is that we're supposed to be moving in less than two weeks! Is it common for PMI companies to reject a buyer's offer so late after the acceptance from the seller and bank? This is completely maddening!
Another quick question... If we walk away, are we just supposed to eat the cost of the inspection because THEY took so long to reject it?
Folks getting involved in a short sale need to know that there is no ethical or legal requirement for efficiency, fair dealing, or compassion on the part of the institutions involved.
It's tough when so many areas offer so many short sales, but there is really no recognized standardized framework for consummating a short sale.
It is DEFINITELY a caveat emptor maxima endeavor.
Folks getting involved in a short sale need to know that there is no ethical or legal requirement for efficiency, fair dealing, or compassion on the part of the institutions involved.
It's tough when so many areas offer so many short sales, but there is really no recognized standardized framework for consummating a short sale.
It is DEFINITELY a caveat emptor maxima endeavor.
I was going to say something similar, just not as well written. Talk to the seller, maybe they can get a personal loan to cover the 10k or if you are happy with the deal you can add 10k or split the difference with the sellers.
To keep the deal together see if they will take $5k (maybe $10k) and then see if the main lender will go lower by that amount. Maybe the 1st lender will eat the extra to prevent you from walking and losing the deal.
Time for a little hardball. Get your agent to see what he can negotiate and his excuse is that you can't afford to pay more.
This is the 1st I've ever heard of a PMI company involved in the price. Do they have interest or rights to who buys the home & price ? Short sales are certainly a new ball game, most of us never heard of it 2 years ago.
I recently talked to another agent who also had bank acceptance for their buyer client and loan approval to close but was ultimately rejected by the PMI company. End result, contract for $200K was rejected, home was foreclosed and sold for $153K.
I DK if this is common but it does happen. That you learned of this only three weeks into the process is absolutely incredible....most times, it takes months. Consider it your good fortune.
Thanks for the responses so far. I'll be sharing your thoughts with my husband.
I left out some info before that may be helpful. The list price on the house was $99K. We offered $99.5K. Even though this is a short sale, the process is going very quickly because the bank is very small and only caters to a town of less than 5 thousand people. Decisions there can be made quickly. The seller owes $138K on his mortgage now. His PMI company was willing to forgive $8K of that debt and are claiming that they could "easily" find a buyer at $130K. I HIGHLY doubt that they would be able to get that kind of money. The house has been on the market for 215 days as of now and was initially listed at $149K. They dropped it periodically and only saw action after it went under $110K, but didn't get any offers until it got to $99K. Plus, the appraisal came in at only $117K. My thought is that the PMI company is just trying to get this property to go into foreclosure. *sigh*
We really can't afford to offer any more than we did before. Unfortunately, the seller cannot afford to take on the full $30K difference. They max out at $20K. It looks like we might just have to walk away, lose out on the inspection fee, and move in with the in-laws now.
If anybody has any other ideas, feel free to share! I'm not quite ready to give up yet, but the outlook seems pretty bleak to me.
Shafted by the appraisal. It would have been better if it came in lower.
The odd thing is, they're ignoring the appraisal. They say that the house IS worth $130K and that the appraisal is too low. They're not even considering the $117K. Plus, the house was listed at $119K for two whole months with no action.
Help me out here guys, what right does a PMI Insurance company have to prevent the sale of a home. Do they have some type of ability similar to a mortgage lender that gives them the right to foreclose or put a lien on the property ? Would they put a lien on the house or the seller individually ?
Never seen this addressed. They are nothing more than an insurance company that is paying a claim on the loss to the original mortgage company.
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The worst part is that we're supposed to be moving in less than two weeks! Is it common for PMI companies to reject a buyer's offer so late after the acceptance from the seller and bank? This is completely maddening!
