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Old 04-24-2008, 11:27 AM
 
1,949 posts, read 5,701,256 times
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You are playing with people's lives, not chicken. You almost sound mean spirited. Sorry, I just don't like it and I don't think it's nice. You said you "think" she has funds. But you don't know for sure. You don't know what situation may be coming their way that they know about and YOU don't. You said she didn't know about mitigation affecting her credit, but now she does, right? And she's still trying to go through with it? What does that tell you? There's more to the story than you know about.

I don't think you have less to lose than she does. She may know exactly what she's doing. $12,000 is probably a lot less then you are going to pay for litigation...and what if you do lose? Then what?

I wouldn't want the bad karma on myself. If you do end up getting this house, I think you have compromised your integrity and your good will.

I wish both you AND the buyer good luck that you can come to some meeting of the minds and no one gets hurt.
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Old 04-24-2008, 02:05 PM
 
16,554 posts, read 35,884,585 times
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Quote:
Originally Posted by tamitrail View Post
You are playing with people's lives, not chicken. You almost sound mean spirited. Sorry, I just don't like it and I don't think it's nice. You said you "think" she has funds. But you don't know for sure. You don't know what situation may be coming their way that they know about and YOU don't. You said she didn't know about mitigation affecting her credit, but now she does, right? And she's still trying to go through with it? What does that tell you? There's more to the story than you know about.

I don't think you have less to lose than she does. She may know exactly what she's doing. $12,000 is probably a lot less then you are going to pay for litigation...and what if you do lose? Then what?

I wouldn't want the bad karma on myself. If you do end up getting this house, I think you have compromised your integrity and your good will.

I wish both you AND the buyer good luck that you can come to some meeting of the minds and no one gets hurt.
I gotta agree with tamitrail, here. You just don't know what is really going on with the sellers, and it just seems like bad karma to me. For myself, all this just wouldn't be worth the hassle, nothing worse than trying to force something to happen.

Good luck, I hope it works out ok for everyone.
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Old 04-24-2008, 03:28 PM
 
Location: Houston, Texas
469 posts, read 1,426,509 times
Reputation: 295
Quote:
Originally Posted by acegolfer View Post
I'm the OP and I have talked to my attorney and agent to get a better idea on her.

1. I don't think the seller is deliberately trying to break the contract. She will potentially be facing a law suit, which I believe is a no-no in her medical profession.

2. I don't think the seller is trying for a short sale. To my best knowledge, she has never missed her mortgage payments. If she was shooting for a short sale, then she ought to behind by at least 60 days, which is not the case.

Given all the circumstances, here's what I think what the seller is trying to do.

In the last couple of weeks, she probably has heard from her patient/colleague about mortgage loss mitigation. Since the house is upside down, she thinks she is qualified and applied for it. But she clearly has no idea about what mitigation is or the effects on her credit. For example, she told the closing agent that the bank will wire the fund after mitigation. She also believes that she can qualify for mitigation even though she has never been late on her payment. She also believes that mitigation will have no effect on her credit and the whole process takes less than 30 days to meet the closing date.

She has been out of medical school for 8 years. Her fiancee, who's also a surgeon, is out for 10 years. So we believe they have savings/assets to close. We think she's bluffing that she has no money to close and hoping that the mitigation will come through so that she owes less.

I asked my attorney to explain the reality to the seller and her agent (who wants to make the deal go through). Once she realizes the true situation, we hope that she will make a rational decision.

If she doesn't understand the situation (which is likely), then we will send a credit signal that we are willing to sue her, if she doesn't close. My attorney said that she will eventually have to close the property and pay for all the legal fees.

I'm sorry if I misled you that I want a legal action. To the contrary, I want the seller to make a rational decision and close. But I'm also preparing for the worst case scenario to protect myself by seeking legal actions.

From your advices, here's a bad scenario that can happen, if I sue her. She declares bankruptcy and the bank owns the property. Then, I have wasted all the legal fees for nothing. Being a medical surgeon, she will probably not seek bankruptcy at this stage.

Otherwise, then my attorney says the court will judge her to sell the property per contract and pay for all the legal fees. I'll lose some such as opportunity cost. But she will lose much more.

I hope this strategy will convince her that it's in her best interest to close per contract.

I'll keep you posted.
This is why

Hi Acegolfer,

I believe your attorney is over looking a very important piece to this puzzle. When the seller defaults on contract in selling personal residence the courts have rarely come to a judgement to have the seller sell their property per contract. It is much more often the case that the courts rule in favor of the buyer for damages. In all the states that I have worked in damages only come to 5% of contract price or earnest money (This depends on whether the contract states that the earnest money will be forfieted as the sole amount of liquidable damages) which ever is less.

I can see your reasoning in talking tough on this transaction but, think you would be irrational to take this to court. I wish you good luck.
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Old 04-24-2008, 04:34 PM
 
995 posts, read 3,797,665 times
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Quote:
Originally Posted by Jamesww View Post
Hi Acegolfer,

I believe your attorney is over looking a very important piece to this puzzle. When the seller defaults on contract in selling personal residence the courts have rarely come to a judgement to have the seller sell their property per contract. It is much more often the case that the courts rule in favor of the buyer for damages. In all the states that I have worked in damages only come to 5% of contract price or earnest money (This depends on whether the contract states that the earnest money will be forfieted as the sole amount of liquidable damages) which ever is less.
I'm the buyer and I put down the earnest money deposit. Why would the deposit get forfeited, if the seller breaches the contract? I guess you got it the other way around. The contract says, if the seller defaults, I get the deposit back AND I can seek damage or specific performance.
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Old 04-24-2008, 08:56 PM
 
Location: Houston, Texas
469 posts, read 1,426,509 times
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Quote:
Originally Posted by acegolfer View Post
I'm the buyer and I put down the earnest money deposit. Why would the deposit get forfeited, if the seller breaches the contract? I guess you got it the other way around. The contract says, if the seller defaults, I get the deposit back AND I can seek damage or specific performance.
Obviously I did not make myself completely clear. If the seller defaults you of course will not be the one to forfeit any money. However frequently it is the case that the courts rule that the seller can only be held to liquidable damages in the amount that was put up as earnest money. And it is almost never the case on an owner occupied property that the courts will give a judgement demanding specific performance. Every state I have worked in damages are held to a maximium of 5% of the purchase price. Just trying to help by giving you information on how the courts usually handle cases involving personal residences.
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Old 04-24-2008, 09:12 PM
 
529 posts, read 2,614,481 times
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Are you living in the house now?

Quote:
Originally Posted by acegolfer View Post
Another update.

Since the seller wants to postpone the closing, we prepared an addendum to postpone the closing till 5/30/2008 under 3 very reasonable and fair conditions.

1. Seller pays $900 to extend my rate lock till 5/30/2008.
2. I occupy the property till 5/30/2008 and pay my PITI as rent to the seller. I pay utility bills.
3. Since seller has to bring money to close, seller makes $15k earnest money deposit towards her closing cost. In case of her default, buyer retains this $15k as liquidated damages in addition to the buyer's deposit without dispute.

All parties (my agent, attorney) think this is more than reasonable. If the seller doesn't sign this, the seller has every intention to breach the contract. I gave her 24 hours to sign. If not, then she will be receiving a letter from my litigation attorney soon.
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Old 04-25-2008, 04:26 AM
 
995 posts, read 3,797,665 times
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james and shenane,

Thanks for the clarification. My liquidated damage will be close to 5% of the purchase price or my deposit. BTW, the property is vacant and move in condition. No, I'm still out of state.
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Old 04-25-2008, 05:44 AM
 
172 posts, read 549,036 times
Reputation: 72
This whole situation is such a shame. I don't know why anyone would bother to sell their house and accept an offer and then risk the whole deal by changing the "rules" in the last hours. Ace, it also sounds like you are bringing a lot of cash to this transaction too in order to get the much lower mortgage than they have. It's a shame they are potentially losing a strong buyer at a time when housing drops by the day and mortgage approvals become more nail-biting.
I pray that these idiots are never operating on me!
Best of luck with the whole thing. If you end up moving on, then it was just meant to be. I am confident you will find something that you will love just as more or better.
Out of curiosity, what state are you in now and what state is the house in?
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Old 04-25-2008, 06:35 AM
 
Location: LEAVING CD
22,973 posts, read 25,329,671 times
Reputation: 15616
I've got a question.. What if you just offer them the following resolution: You will walk away and find another house IF they cover the cost of an interest buydown to the 5.5% you have on their house. It'd save both of you money and a whole lot of trouble.
I understand that it's a matter of principal and no one likes being jerked around, I for one don't care that some may see it as a "mean" thing or "bad kharma" to force someone to complete a deal that they agreed to but at some point you really have to sit down and look at what it's worth to you to prove a point or if it's going to cost you just for your pride. If they'll pony up for the buydown AND I could find another house I liked I'd go for that resolution and sleep at night.
I'm in a fight like that right now with a flooring contractor and we go to depositions soon. Will I win? Probably, but it's going to cost me 5k to get it done and I may or may not get it back. If I win I'll get my 10k back but it's really hard on the nerves to go through this. In my case had they just honored the warranty we'd be fine.
Good luck...
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Old 04-25-2008, 10:17 AM
 
995 posts, read 3,797,665 times
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Quote:
Originally Posted by jimj View Post
I've got a question.. What if you just offer them the following resolution: You will walk away and find another house IF they cover the cost of an interest buydown to the 5.5% you have on their house.
Believe me, I have thought about that option.

1. My rate lock can't be transferred.
2. To get a new loan at 5.5%, I'll have to pay 1.5 points (is 1 point for 0.25% reduction?), which is $4,500. Seller, being who she is, won't accept this.
3. Most importantly, I don't want to be the one who initiates canceling the contract. It can easily back fire me. I'm going follow per current contract till the contract closing date. In addition, I want the brokers to get their share. Seller's broker gets the fee if seller defaults. I want to protect the agents who did their jobs.

FYI, I'm still in NY moving to FL next week. I can't look for another house right now. Sorry, if I demean this whole situation by calling a game. But I'm referring to a game in Economic, which is not about a competition.
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