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Can the seller keep earnst money although it was not our fault for closing date to be extended?

With a FHA loan and a "flip" this requires two appraisals, the bank did not know this and scheduled a week AFTER our closing. Frustrating for both the seller and us. They admitted fault but the seller has stated they will keep our money , we paid for both appraisals , and still no home. What can we do? So powerless. We want to call this house our home, and seller wants the profit understandably. Please help. Thank you
  • May 02 2012 - Kingman
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Answers (3)

Best Answer

I want to share some uplifting news...it will be alright!

Usually.

There is a lot of emotion tied up in this right now. Hence, the seller's harsh reaction about your earnest money.

But if the home appraises, this is really a technicality, and the seller would rather have you close on their property in another two weeks than have to go through the listing process again.

Your lender really screwed this up, as in your mortgage broker, so make sure to stick some coal in their stocking and contact your attorney to stick it to them if the seller is uncooperative.

But mainly, get your buyers agent to smooth things over with the listing agent and keep things calm for the next few days while you straighten out the process with your lender.

And as one last ditch feel good statement.....I've had many buyers lose homes they love for various reasons, only to go through the 12 stages of grief in about 2 1/2 weeks before we came across another different but equally 'special' property. Anybody who has been married twice or had more than one 'partner' in their life will understand this.

Cheers.

  • May 04 2012
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The seller must not be in their right mind or it is a hot property. 2 weeks could equal a minor loss if you were willing to pay for an extension. Now the property will be remarketed for 30+ days and cost them more in utilities, tax proration etc. The only thing that may come into your corner is if the second appraisal does not come to asking price. Then the truth will come out. That sounds like a sticky situation in the 1st place. You may have just bought your way out of a long term problem.

  • May 04 2012
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Unfortunately, any mistakes on your side of the transaction will be considered the fault on the buyer's side so, essentially, it IS your fault. The people representing you ARE at fault.

There's no reason your bank did not know this from the beginning. Your realtor and lender should always look into the ownership prior to writing an offer since it WILL affect your loan. This should have been prevented. There are a bunch of "should haves" here, but those won't help you.

Moving past what should have been done, most lenders aren't going to decline a short extension, cancel the contract and demand your earnest money. It will benefit them if they just allow a little extra time rather than start all over with a new buyer. They may charge you for it but usually anywhere from $50-$250 depending on what was specified in the bank addendum of your contract. You may also get a rush fee for the appraisal if your lender is able put a rush on it.

You may be in breach of contract. If the seller is unwilling to extend and your contract supports their decision, there really isn't anything you can do to resolve the matter. Your next step is to move on. I would suggest getting new representation as well.
  • May 03 2012
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