Contingency contract

[gotmyown3]

What is the name of your state (only U.S. law)? MS

My husband is being transferred to MS from where we live in AL. Our house is on the market here. We went to MS and found a house we love, and did a contingency contract. The house has been on the market well over a year and needs some cosmetic work ASAP. The owners of the house wanted $129000 and we offered $125,000, they pay closing and we pay $1000 earnest money. They won't agree to pay the closing cost without a good faith estimate from our mortgage company. We don't have a mortgage company in MS yet, because we haven't started the buying process due to still having this mortgage.

What is it they are asking for? My mother in law said they want to know what we are going to pay in closing cost on this house but that doesn't seem right to me. I mean, we're in AL and what would closing cost on this house have to do with closing cost on a house in MS?

 

[tranquility]

They're looking for some indication you are serious about buying the property and did not create a "contingency" which makes your promise to buy specious.

 

[FlyingRon]

You've completely lost me. The GFE would have to be for the house you are PURCHASING not the one you are selling. Why are you not trying to get financing?

Do you even have a accepted offer yet? It sounds like you're still negotiating. If the contract says seller pays the closing costs, then they can't do anything about it now. Send them the GFE when you get one so they can prepare themselves for the closing. If they have NOT accepted your offer yet, and you're not far enough along in the financing to have a real GFE, you might get a guess from the bank and rather than "seller pays all closing costs" cap it at an amount that should cover it. No seller in his right mind would accept an open ended "pays all costs." What happens if you take a loan with 3 POINTS or something?
Of course, as a seller, I'd demand way more than the less than 1% earnest money he let you off with.

 

[gotmyown3]

Sorry I know I am confusing. We didn't do all this when we bought our current home.

The GFE is for the home we are purchasing, not the one we are selling, but my mother in law told me the seller on the new house wanted to know what the closing cost would be when we sold our current home, but I didn't think that was right.

Let me back track: our first offer was $122,500, and the seller pays closing costs. Their first counter was $125,000; they'd pay $1800 in closing and asked for $500 in earnest money. Our recent counter was $125,000, they pay closing cost and we'd pay $1000 earnest money.

I have never even heard of a contingency contract. The seller's realtor suggested it to our realtor in MS. The seller also offered to let us lease/purchase the house in MS for $900 a month if our house sells and we are still waiting for the mortgage to go through on the new house.

No, our house just went on the market, but we have to move to MS by October 1st, so we wanted to have a house in mind in MS as soon as this one sells and the houses in our area have been moving pretty fast fortunately. Until it does we are going to live with my mother in law.

 

[FlyingRon]

Let me back track: our first offer was $122,500, and the seller pays closing costs. Their first counter was $125,000; they'd pay $1800 in closing and asked for $500 in earnest money. Our recent counter was $125,000, they pay closing cost and we'd pay $1000 earnest money.

So, no you have no contract, you are still in negotiation.

I have never even heard of a contingency contract. The seller's realtor suggested it to our realtor in MS.

You're going to have to explain just what it is you are talking about. Real estate contracts often have contingency clauses that potentially let you out of the contract for a number of reasons: sale of your existing home, failure to obtain financing, adverse home inspection reports. You'll have to tell us just what contingency issue you're talking about or concerned with.

The seller also offered to let us lease/purchase the house in MS for $900 a month if our house sells and we are still waiting for the mortgage to go through on the new house.

OK.

So feel free to negotiate. Again as I said, the seller is being way gracious with you. Start the mortgage process and get him a GFE or offer to cap the closing costs.

What you should have is a lawyer down in MS to go over the contracts once you do have them hammered out (or preferably before).

 

[gotmyown3]

I'm sorry. I know I am probably not explaining this well at all.

The seller's realtor told us and our realtor via conference call, that we should do this contingency contract with the seller, so that if the seller accepts our offer, it is contingent on our house selling here. She said that if the seller accepts our offer and signs the contingency, and if the seller receives a better offer before we are ready to close on the house in MS, then they have to give us a 48 hour first right of refusal. Our realtor explained that it would also prevent the seller from changing their minds about the price they will sell for when we are ready to buy. I have never in my life heard of this whole thing, that's why I'm so confused, and my husband is gone all week on the road, so it all falls on me.

The seller's realtor said her client needed a GFE on the closing cost of the house in MS, and that 's what I am confused about. My mother in law is telling me they want to know what the closing cost would be on our AL house and I don't see how that could possibly matter in closing on the house in MS. And, I didn't know if I can get a GFE without having actually gone forward with trying to get a mortgage. I am waiting on my husband to find out if he thinks we should try to get pre-approved pending the sale of this house.

Like I said, we didn't go through all this when we bought our current house so I am completely lost.

 

[FlyingRon]

It all matters what the contract says, with regard to the contingencies (with regard to "better offers" and the like). Your realtor should inquire if they really want the GFE on the loan for the house being purchased. You are right the other way makes no sense. The GFE goes to the borrower, not the seller.

Again, if you can't get the GFE, capping the closing cost obligation might make things palatable (or just adjust the offer and do away with such things).
Frankly, with a tiny earnest deposit and no attempt to even start the financing process I'd be really leery as a seller. You should be talking to banks and as soon as that offer comes down (if not earlier) putting that application in.

If the contingency on the sale of your other house has a clause allowing them to give you 48 hours to remove it, 48 hours is not likely to be anywhere near enough time to lock down financing.

 

[gotmyown3]

Thank you!

Whew! It took forever but I finally got through to my husband. He said he had already talked to a bank in MS (I am not involved in the financing as I do not work but I will be on the deed) and the guy at the bank is supposed to be emailing him the forms to fill out and will take of whatever it is. He said the APR is 3.78%? Wow. Anyway, my husband told me to calm down that he understood what was going on.

I got all worked up for nothing!

 

[HomeGuru]

Thank you!

Whew! It took forever but I finally got through to my husband. He said he had already talked to a bank in MS (I am not involved in the financing as I do not work but I will be on the deed) and the guy at the bank is supposed to be emailing him the forms to fill out and will take of whatever it is. He said the APR is 3.78%? Wow. Anyway, my husband told me to calm down that he understood what was going on.

I got all worked up for nothing!

**A: after reading all the posts I still don't know what's going on. But good luck.

 

[OHRoadwarrior]

The seller wants a good faith estimate, in writing, of the closing costs they would be expected to pay by acceptance.

 

[CLJM]

The seller wants a good faith estimate, in writing, of the closing costs they would be expected to pay by acceptance.

The seller would get their estimate of the sellers anticipated/expected closing costs from their Realtor. As each offer/counter offer is extended, the seller's Realtor should be providing an estmate of costs based on each of the different financial offer/counter offers. Likewise, for the buyer's Realtor on their end.

It appears to me from the posts, that both Realtors are neglecting to provide the necessary guidance for their respective clients.

OP---wherever you are employed or not, it is paramount that you participate and understand every step in the buying and selling process.

 

[HomeGuru]

The seller would get their estimate of the sellers anticipated/expected closing costs from their Realtor. As each offer/counter offer is extended, the seller's Realtor should be providing an estmate of costs based on each of the different financial offer/counter offers. Likewise, for the buyer's Realtor on their end.

It appears to me from the posts, that both Realtors are neglecting to provide the necessary guidance for their respective clients.

OP---wherever you are employed or not, it is paramount that you participate and understand every step in the buying and selling process.

**A: The OP did not state that any Realtor was even involved. But then again many posts do not state all the facts.

 

[CLJM]

**A: The OP did not state that any Realtor was even involved. But then again many posts do not state all the facts.

OP's 3rd post..... " The seller's realtor told us and our realtor"

 

[HomeGuru]

OP's 3rd post..... " The seller's realtor told us and our realtor"

**A: you're right. thanks for the correction.

 

[gotmyown3]

UPDATE*****

Friday we spoke to our realtor in MS. You know, it's a real pain in the nether region to be doing everything by phone and email.

Anyway....our realtor called and wanted to know the status of the good faith estimate. I told her the mortgage company we are using said it would be 60-90 days before they could give us that, if the sellers agreed to the price we offered. She suggested that we put in the contingency contract that the sellers will pay up to $4000 in closing costs and be done with it. She said that in her years of experience the closing cost on a house in the price range we are looking at was never over $4000. She extended that to the sellers' realtor and told her that if the sellers did not want to proceed that we were not going to extend a counter offer as there were plenty of other houses we could look at in that price range. The sellers accepted and signed the contingency contract.