closing canceled

What is the name of your state? Wisconsin
Hi,
I was going to close on April 23rd which did not happen. I found out the night before when I was at the home doing a final walk thru. Their realtor told mine that the owners are going thru a divorce and filled for bankruptcy and that they also owe $6000.00 more than the accepted offer. The thing is the apprasial almost didn't meet the price I offered them they had to do some things to get it to that price. Their realtor asked if I wanted to pay the extra 6000.00 mine told her it didn't meet apprasial before and we already agreed on a price before why should I pay more. I don't know why no one told me about this before why not until the night before. I had every thing ready to go things in a trailer. Now I have until 4-30-04 to close or I lose my interest rate and will have to pay even more. Can anyone tell me if I can sue or what I can do. I still don't know if I have a home or not. Thanks

[HomeGuru]

Originally posted by kiya98
What is the name of your state? Wisconsin
Hi,
I was going to close on April 23rd which did not happen. I found out the night before when I was at the home doing a final walk thru. Their realtor told mine that the owners are going thru a divorce and filled for bankruptcy and that they also owe $6000.00 more than the accepted offer. The thing is the apprasial almost didn't meet the price I offered them they had to do some things to get it to that price. Their realtor asked if I wanted to pay the extra 6000.00 mine told her it didn't meet apprasial before and we already agreed on a price before why should I pay more. I don't know why no one told me about this before why not until the night before. I had every thing ready to go things in a trailer. Now I have until 4-30-04 to close or I lose my interest rate and will have to pay even more. Can anyone tell me if I can sue or what I can do. I still don't know if I have a home or not. Thanks

**A: do not count on closing. I see serious issues with this especially if they do file BK. Why did your Realtor not verify the mortgage balance(s) prior?

Originally posted by HomeGuru
**A: do not count on closing. I see serious issues with this especially if they do file BK. Why did your Realtor not verify the mortgage balance(s) prior?

I don't know why their realtor didn't know this and mine didn't even know they were doing a divorce or BK. I have a contract so if I can't sue them can I go after their realtor company. Their realtor doesn't seem to know what see is doing and I am very angry about all of this. It is costing me money.
Thanks

[HomeGuru]

Originally posted by kiya98
I don't know why their realtor didn't know this and mine didn't even know they were doing a divorce or BK. I have a contract so if I can't sue them can I go after their realtor company. Their realtor doesn't seem to know what see is doing and I am very angry about all of this. It is costing me money.
Thanks

**A: suing will only waste your time and money. Because they owe more than your purchase price, the mortgage lender and any other judgement creditors ( if any) are not obligated to accept less than what they are owed. Therein lies the main problem.

[Bigfoot]

When you said, "The thing is the apprasial almost didn't meet the price I offered them they had to do some things to get it to that price", that's your first major caution flag to run.

If the house appraises less than the asking price, then that's the value. Period. This is what most lenders are most interested in. If the house was "gussied up" (my words) to make it even meet your asking price, imagine the problems you'd have later if you tried to sell at $6000 more than it's value.

Yes, you might lose your lock in rate, which would be ashamed. But it's better than being locked into a house that is overpriced.

[HomeGuru]

Start looking for another home.

Originally posted by HomeGuru
Start looking for another home.

Thanks for the info and help I think your right and I am going to start looking for a new home. I still wonder if I should make a complaint against their realtor?

[HomeGuru]

Yes, go right ahead.

[nextwife]

I am in WI, and can maybe share a bit of info on the closing process and why the realtors order what they do when they do.

First, a real estate agent is not necessarily in a position to verify the full payoff amounts at the time of listing or offer or while the buyer is in the process of getting their financing. The title insurance is generally not done until there is an accepted offer and closing set. One reason is that many of the large real estate companies OWN their own title agencies for their deals and do not wish to incur the costs of a title search (in our market, this is not paid until closing, and NOBODY is able to collect "cancellation" fees from sellers if the deal doesn't go. So they often wait until the buyer is approved so that THIER client, the seller, doesn't get stuck with extra title costs if the buyer is unable to qualify for a loan.

Even if they use an independent title provider, they do not want to possibly incur a cancellation or revision fee, because if the proposed buyer can't close, and the seller must pay for an ammended title search for a new buyer, the seller will balk and complain that the RE broker should have waited until the buyer is approved, and that THEY, the seller shouldn't have to pay for the "extra" title search. Seller pays an inclusive fee for search, exam and owner's policy. That is the standard practice here, unlike markets where the buyer pays a bigger chunk of the title costs and these are passed on to the buyer. Then they want the RE agent to eat the cost. I've seen this many times. This causes many RE companies to have a policy of holding off on getting title until "the buyer looks good" and all contingencies are waived.

Additionally, the lender will NOT give release any balance or loan status info to the RE agent because of privacy laws. Generally, once the deal is looking good, a file goes to the realtor's closing department, who is usually the title insurance company. They have the seller sign an authorization from the seller's lender which authorizes release of loan payoffs, etc. to the title closer. ONly then can the loan balances be accessed.

Another problem is that many lenders, because they are able to get so few front-end fees in our cut-rate consumer oriented market, charge a load of back-end fees, assessed as closings occur. They charge a fee for a payoff letter. They charge a fee to get the payoff faxed instead of snail mailed (and there is never time for snail mail). They charge a fee to "close" the property tax escrow. Hundreds of dollars. If the closing department orders all this prematurely, and the buyer then cannot close because they didn't end up getting a loan commitment, the sellers scream and complain about incurring these fees twice and badmouth the realtor and their company.

SOOOO, any liens or judgements that have recently attached to the real estate and must be paid at closing are often not known until that title search is completed, often only a week or two before closing. And of course, in WI, we do not have escrow closings, and occupancy prior to closing is almost NEVER done. So everything happens at the closing table, and all the paperwork is completed shortly before.

I'm not sure how much ahead of time some of this could have been known, based on how the process occurs here. If the high payoff is due to added fees because of default (a shortfall in the tax escrow and added legal fees for a foreclosure being started or other liens and judgements recently filed) it would not have been known until all the payoffs and title work came in.

Originally posted by nextwife
I am in WI, and can maybe share a bit of info on the closing process and why the realtors order what they do when they do.

First, a real estate agent is not necessarily in a position to verify the full payoff amounts at the time of listing or offer or while the buyer is in the process of getting their financing. The title insurance is generally not done until there is an accepted offer and closing set. One reason is that many of the large real estate companies OWN their own title agencies for their deals and do not wish to incur the costs of a title search (in our market, this is not paid until closing, and NOBODY is able to collect "cancellation" fees from sellers if the deal doesn't go. So they often wait until the buyer is approved so that THIER client, the seller, doesn't get stuck with extra title costs if the buyer is unable to qualify for a loan.

Even if they use an independent title provider, they do not want to possibly incur a cancellation or revision fee, because if the proposed buyer can't close, and the seller must pay for an ammended title search for a new buyer, the seller will balk and complain that the RE broker should have waited until the buyer is approved, and that THEY, the seller shouldn't have to pay for the "extra" title search. Seller pays an inclusive fee for search, exam and owner's policy. That is the standard practice here, unlike markets where the buyer pays a bigger chunk of the title costs and these are passed on to the buyer. Then they want the RE agent to eat the cost. I've seen this many times. This causes many RE companies to have a policy of holding off on getting title until "the buyer looks good" and all contingencies are waived.

Additionally, the lender will NOT give release any balance or loan status info to the RE agent because of privacy laws. Generally, once the deal is looking good, a file goes to the realtor's closing department, who is usually the title insurance company. They have the seller sign an authorization from the seller's lender which authorizes release of loan payoffs, etc. to the title closer. ONly then can the loan balances be accessed.

Another problem is that many lenders, because they are able to get so few front-end fees in our cut-rate consumer oriented market, charge a load of back-end fees, assessed as closings occur. They charge a fee for a payoff letter. They charge a fee to get the payoff faxed instead of snail mailed (and there is never time for snail mail). They charge a fee to "close" the property tax escrow. Hundreds of dollars. If the closing department orders all this prematurely, and the buyer then cannot close because they didn't end up getting a loan commitment, the sellers scream and complain about incurring these fees twice and badmouth the realtor and their company.

SOOOO, any liens or judgements that have recently attached to the real estate and must be paid at closing are often not known until that title search is completed, often only a week or two before closing. And of course, in WI, we do not have escrow closings, and occupancy prior to closing is almost NEVER done. So everything happens at the closing table, and all the paperwork is completed shortly before.

I'm not sure how much ahead of time some of this could have been known, based on how the process occurs here. If the high payoff is due to added fees because of default (a shortfall in the tax escrow and added legal fees for a foreclosure being started or other liens and judgements recently filed) it would not have been known until all the payoffs and title work came in.

I still believe that something isn't right here. They had 45 days to find out this before closing, the closing company kept saying everything checked out fine and there would be a closing that day. Me being a buyer and I have to have all my things in order to close then so should a seller. I had my financing in order before I made a offer then every thing taken care of within a couple of days after it was accepted. I think either the seller wasn't honest or the realtor just didn't want to say anything to see if it would go to closing. I think someone should have know before the night before closing. Why should I be the one put out now having to stay with friends because of there mistake and now not having a home. There should be a better way of doing this I am sure I am not the only one out there that has come across something like this.

[Souix]

You are right OP, and it all stems from the fact that a lazy Realtor did not do their job properly.

When I take a listing, I ask the seller if they are current on their mortgage payments, get a copy of their last paid mortgage statement and have them sign an authorization so that I can get more information from their underlying lienholder. That is so simple to do it is almost a no brainer. Then when I have all the figures, including whether or not there is a prepayment penalty, then I can properly do the seller's net sheet. If it appears that the seller owes more than the property is worth, then I usually either don't list the home (if the seller is current) or I list the home adding the fees and costs to the mortgage balance to come up with a list price.

If the seller is not current on his mortgage payment and in financial trouble, then I still get all the authorizations from the seller and I contact his underlying lienholder and negotiate a "short sale" arrangement. A short sale is when the lender agrees to accept less on the payoff of their loan. I have done many of these and they are time consuming and sometimes labor intensive. But the listing agent has a duty to the seller, so that is their job. Thats what we get paid for.

So based on what I read in your original post, the listing agent didn't do the homework to figure out how to sell this home, and now you are being harmed by their incompetancy. If it was just the problem of accepting less on the loan, the listing agent can now negotiate with the lender to accept less, but since the seller has filed BK, you are out of luck. Sometimes sellers file BK without telling their agent (I've had this happen). We are not mind readers. Once a seller files BK, if there are any transactions in the works, they are cancelled.

You might want to have your Realtor check with the BK Trustee to see how you can still purchase this home, or find another one.

Hope this helps and good luck to you.

Hi,
I guess what I am trying to also find out is what can I be compensated for. They tell me now that maybe I can close on it in 2 weeks no exact date yet. So either way I go I feel that I should get some kind of compensation for all of this the time and money it has cost me. Does anyone know about getting compensated for something like this.
Thanks

[HomeGuru]

Originally Posted by kiya98

Hi,
I guess what I am trying to also find out is what can I be compensated for. They tell me now that maybe I can close on it in 2 weeks no exact date yet. So either way I go I feel that I should get some kind of compensation for all of this the time and money it has cost me. Does anyone know about getting compensated for something like this.
Thanks

**A: you have little chance of getting anything out of it.