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Short Sale

Hi
Made an offer on a short sale ,offer has been accepted by seller & bank,now offer has gone to mortgage insurer for their acceptance.since I first made my offer interest rates have increased about 1 % and home value has declinded Can I rescind my offer & make a new offer based on the above current conditions or do I have a right to negoiate a revised offer????
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December 19 2010 - Marysville
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Answers (7)

Wow73,
You are encountering the #1 obstacle in short sales today, the mono-line insurance on securities. 
Your purchase contract should have some element allowing a time limit for acceptance of the term.
If an appraisal is performed, and value is lower than the purchase contract, then you have the ability to withdraw from the purchase.
Regarding the interest rate, unless there is a specific reference to your ability to withdraw if rates are higher, then your agent should have had that in there...if that was a concern...
Hope this helps.
Feel free to contact me via zillow or you can obtain my contact info on my profile.
Best regards!
Steve
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December 24 2010
In California we have a 17 day contingency period to do all investigations on homes, get a loan approval, read disclosures, and home appraisal. Also, in our contracts is an interest rate clause that states if your interest rate increases above "x" you may be able to cancel the escrow.

In terms of cancelling the transaction related to decline in home price this may become an issue with your appraisal. If the appraisal comes in low you can cancel the escrow also if the bank doesn't reduce the initial offer price to the present appraised value.

Within the 17 days if an issue comes up with your physical inspection, HOA disclosures or seller's disclosures you may cancel the transaction as well. Just to clarify these are transactions based in California.

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December 21 2010
You agent/broker should have a local real estate attorney who works in short sales answer this question. My experience in North/South Carolina is that the mortgage insurer is not part of the approval process. Once the lender/mortgage services company issues the short sale acceptance letter the deal is ready to go to closing.

If your interest rates have increased a full % you may want to talk with another mortgage company. We are still in declining markets across the US of course the value has declined but that shouldn't hurt you because you came in real low with your offer to begin with?
 
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December 21 2010
Profile picture for P Banks
In your purchase contract you should have "contingent on appraisal". You may be able to amend the price to reflect the current appraised price. It really depends on how your contract was written & how many days have passed. Good Luck to you.
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December 19 2010
In California, we generally don't handle sales through Real Estate attorneys, although we're not going to advise against seeking the advice of an attorney.
Check with your agent and see what they have to say regarding contract terms as written.
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December 19 2010

Until a short sale approval letter is received by the seller, it is not a firm contract yet as all parties haven't agreed.  Check with your agent regarding your options.

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December 19 2010
That depends on how your sales and purchase contract is written. Best to consult a local Real estate attorney. There may be clauses in your contract that allow you to terminate the contract due to the situation you describe.

You may also be able to terminate the contract if the bank does not provide a timely response as defined in your contract.

A local Real Estate attorney is the best source to inform you of your options.
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December 19 2010
 
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