Expert: Dick Dennis - 1/25/2009

Question
Home values have dropped.  A distressed seller signs a purchase agreement with some knowledge that a substantial amount of money is due by the seller at closing to pay off the current mortgage and realtor costs. The following day the buyer issues a deposit to there realtor. However, a day later, the seller informs the the seller's agent the sale is off because the seller discovered that they could not come up with the money for the closing.  Is the seller protected here? Can the buyer force the sale? How could this be done if the seller does not have the money? What is the likely to happen?

Answer
The seller's agent didn't do his/her job if the seller got into this situation, Brian. Before a seller signs an acceptance, his agent should go over the costs of closing and how much he seller can expect to receive after closing.

The buyer has no way of knowing what is the financial situation the seller is in. The agents involved represented that this was a sale. The house should have been withdrawn from sale or the sale can go through with a "short-sale." A short-sale is when the lender of the selling property lets the sale go through to closing with the knowledge that not enough from the sale will pay off the unpaid balance of the mortgage. The lender usually stipulates that the seller cannot receive any money whatsoever and the Realtor(s) involved quite often have to accept a reduced commission. This is why they call it a "short-sale."

Yes, the buyer can indeed force his purchase of the property with a court case with his attorney. But before this happens, the buyer and seller should sit down with their respective Realtors and/or attorneys to decide how or if the sale will go through. Quite often that pre-suit conference allows the seller to pull out of the sale. In this kind of market there are too many houses for sale for the buyer not to let the seller off. I do wish you well.

Dick Dennis
dixiedee13@aol.com