Compensate us!
March 26, 2008 6:47 PM Subscribe
I am buying a condo and was supposed to close escrow and move in Tuesday at 5pm (yesterday). The lender backed out 1 week before that because of a lawsuit, and we had to get a new lender. We were assured by our realestate agent and our broker that there would be no issues.
In the meantime, we gave our 30 day notice at our apt. and started to pack. NOW escrow isn't supposed to close for another week and we still have to move. We have to pay out of pocket for a hotel, or day to day lease on our apartment. This isn't cheap. Can we, should we, and who will compensate us?
more info:
We met with our broker before we even put an offer on the condo. We got an approval and he said to us "No problem, you're in really good shape, we could close in a week if we wanted to". So we left him happy and excited. We made an offer on the condo, and it was accepted! We called our broker. And called, and called again. He never answered our calls. Finally after getting a hold of him, and getting the loan papers done, everything was in the clear.
Basically, we were waiting for 30 days to end so we could move in. A week before the move in date, we got a call saying the lender had backed out because someone had broken their ankle on the property and the HOA was being sued. This didn't affect us, but the backed out anyway. Our broker assured us that nothing would change and we would still move in on schedule, we just needed a new lender.
He found us one and it has taken them FOREVER to get the documents in order. 30 days has come and gone, and we're living in an apartment full of boxes. We are supposed to be out of our apartment by the 31st. Now we're being told this isn't going to happen.
We have to find a place to live after the 31st until we close escrow, which isn't until all the papers are signed and processed. Since our lender and our real estate agent continually told us this wasn't a problem and we'd be in there by now, we feel that its really unfair that we have to pay out of pocket for more rent or a hotel.
Besides how stressful this is. Even though it seems like its out of everyones hands, we aren't at fault for this. Can we ask someone to pay this for us? Who?
more info:
We met with our broker before we even put an offer on the condo. We got an approval and he said to us "No problem, you're in really good shape, we could close in a week if we wanted to". So we left him happy and excited. We made an offer on the condo, and it was accepted! We called our broker. And called, and called again. He never answered our calls. Finally after getting a hold of him, and getting the loan papers done, everything was in the clear.
Basically, we were waiting for 30 days to end so we could move in. A week before the move in date, we got a call saying the lender had backed out because someone had broken their ankle on the property and the HOA was being sued. This didn't affect us, but the backed out anyway. Our broker assured us that nothing would change and we would still move in on schedule, we just needed a new lender.
He found us one and it has taken them FOREVER to get the documents in order. 30 days has come and gone, and we're living in an apartment full of boxes. We are supposed to be out of our apartment by the 31st. Now we're being told this isn't going to happen.
We have to find a place to live after the 31st until we close escrow, which isn't until all the papers are signed and processed. Since our lender and our real estate agent continually told us this wasn't a problem and we'd be in there by now, we feel that its really unfair that we have to pay out of pocket for more rent or a hotel.
Besides how stressful this is. Even though it seems like its out of everyones hands, we aren't at fault for this. Can we ask someone to pay this for us? Who?
What your lender did is actually a really common trick, it's used a lot in the world of home transactions. My parents and a lot of other property people have dealt with this same underhanded tactic. I am guessing that your new terms are less attractive, right? They are delaying because of the market, the HOA issue is a total mind game, and you've fallen for it. It might be likely that you were pulled in by your broker, who will get a cut of the sale plus a probable commission but to be on the safe side, I would call the HOA and verify that there is actually a lawsuit and if there is to ask for all of the information you can legally get. The idea that a lender would back out because someone not affiliated with your mortgage broke their ankle is ridiculous and makes no sense in light of you signing a mortgage. I would also get a lawyer. As I said, this is a common stall to renegotiate tactic.
posted by parmanparman at 7:27 PM on March 26, 2008
posted by parmanparman at 7:27 PM on March 26, 2008
Thinking about it, did you ask the first lender why they would back out a mortgage in a down market when any case by the ankle person would be directed at the original owner, rather than you?
posted by parmanparman at 7:32 PM on March 26, 2008
posted by parmanparman at 7:32 PM on March 26, 2008
There's probably no recourse here. I went through almost precisely the same thing, right as the market started to tank here in Arizona. After all the delays, I just elected to back out of the whole deal and rent for another year ... and honestly, I'm very happy that I did. Anyway you might finagle another week or so out of your landlord/future tenants? I was able to get a whole additional month by negotiating with the new tenant before I even spoke to my landlord (I offered to pay her security deposit.) Good luck. I know how frustrating this is.
posted by notjustfoxybrown at 7:53 PM on March 26, 2008
posted by notjustfoxybrown at 7:53 PM on March 26, 2008
This is dated article on the back-out tactic. But you can find more recent examples.
posted by parmanparman at 8:34 PM on March 26, 2008
posted by parmanparman at 8:34 PM on March 26, 2008
I think parmanparman has some good advice. Especially,
*also get a lawyer.*
If there's even a hint that someone knowingly lied or omitted relevant info, you might be due more than what you're out. Some lawyers are quite good at this sort of thing -- they do it for a living, no less.
posted by GPF at 8:40 PM on March 26, 2008
*also get a lawyer.*
If there's even a hint that someone knowingly lied or omitted relevant info, you might be due more than what you're out. Some lawyers are quite good at this sort of thing -- they do it for a living, no less.
posted by GPF at 8:40 PM on March 26, 2008
I guess it's possible that the broker is indeed dishonest and is setting you up for a more expensive loan.
But random and frustrating delays seem to be a pretty normal part of the house-buying process, even without unethical behavior. It's this intricate dance that depends on a whole bunch of people choreographing everything perfectly, and sometimes that just doesn't happen. Ask 20 people who have bought houses, and some large percentage of them will have stories of delays from paperwork errors, dishonesty, bad luck, and so on.
But regardless, your housing costs in the meantime are your business, not anyone else's. You aren't having to pay double -- you start paying on the condo when the deal actually closes. So whether you are staying with friends, renting an apartment, living in a tent, whatever, you are going to have to arrange housing.
posted by Forktine at 8:59 PM on March 26, 2008
But random and frustrating delays seem to be a pretty normal part of the house-buying process, even without unethical behavior. It's this intricate dance that depends on a whole bunch of people choreographing everything perfectly, and sometimes that just doesn't happen. Ask 20 people who have bought houses, and some large percentage of them will have stories of delays from paperwork errors, dishonesty, bad luck, and so on.
But regardless, your housing costs in the meantime are your business, not anyone else's. You aren't having to pay double -- you start paying on the condo when the deal actually closes. So whether you are staying with friends, renting an apartment, living in a tent, whatever, you are going to have to arrange housing.
posted by Forktine at 8:59 PM on March 26, 2008
They are probably doing you a favor. This is a great time to be renting. I haven't seen data on LA specifically, but it seems likely that most of the really overpriced markets still have a lot further to fall.
posted by Coventry at 3:02 AM on March 27, 2008
posted by Coventry at 3:02 AM on March 27, 2008
I apologize for not being to recall the legalease terms... But, I faced a similar situation when I bought my house. It was taking the bank forever to finish all the paperwork and the landlord had rented out our apartment. We were able to move into the house prior to closing (it had been vacant) through a special contract. The seller had to grant permission and we signed a little-contract-type-thing. It specified that it was not a renter-landlord situation. I don't recall paying anything for the two weeks we were in the home prior to closing. Check with your lawyer. We are in NY, if it makes a difference.
posted by wg at 6:06 AM on March 27, 2008
posted by wg at 6:06 AM on March 27, 2008
We had this situation when building a house. The house was not ready (of course) when the builder had estimated, so our apartment lease was ending one month before we would be able to settle on the new house. We were able to talk to our landlord and extend the lease for two months, and pay a premium, I think 100 more per month above our normal rent for the lease extension. This was much more preferable to trying to find temporary quarters elsewhere.
posted by LightMayo at 7:14 AM on March 27, 2008
posted by LightMayo at 7:14 AM on March 27, 2008
Complain to your local regulatory boards and let your lender know that you're doing so. The exact same thing happened to a friend and he got royally screwed when the new terms (surprise!) had him paying out 6 grand instead of getting back 2 grand at closing.
posted by electroboy at 12:54 PM on March 27, 2008
posted by electroboy at 12:54 PM on March 27, 2008
Consider the amount of $ your real estate agent will make from the sale of that condo (usually the seller and buyer's brokerages split 7% of the sale price as commission; the broker typically keeps 25-50% of that 3.5% and gives the rest to the agent.)
That's probably clear as mud: basically, for every $100,000 of sales price, your agent is probably getting between $1800-2500.
I used to be a licensed Realtor in San Diego. If you were my clients, I wouldn't have blinked at footing the bill for you to stay at a Residence Inn or something similar for a few days; yes, it cuts into my bottom line, but by treating you honorably not only am I doing the right thing, but hopefully earning a client for life. Further, maybe you'll go on to tell others about the great thing their agent did for them and I get more business. I may not make as much on this deal as I'd like, but it could pay off in the end.
To sum up, your real estate agent has no obligation to help you out. However, it is probably in their best interest ethically, professionally, and economically to do so. I don't know what the sale price of your condo is, but they could stand to make over $5000 gross. Your leverage in this is the threat of backing out; don't be afraid to float the idea if you think it will help move the process along.
posted by EKStickland at 12:56 AM on March 28, 2008
That's probably clear as mud: basically, for every $100,000 of sales price, your agent is probably getting between $1800-2500.
I used to be a licensed Realtor in San Diego. If you were my clients, I wouldn't have blinked at footing the bill for you to stay at a Residence Inn or something similar for a few days; yes, it cuts into my bottom line, but by treating you honorably not only am I doing the right thing, but hopefully earning a client for life. Further, maybe you'll go on to tell others about the great thing their agent did for them and I get more business. I may not make as much on this deal as I'd like, but it could pay off in the end.
To sum up, your real estate agent has no obligation to help you out. However, it is probably in their best interest ethically, professionally, and economically to do so. I don't know what the sale price of your condo is, but they could stand to make over $5000 gross. Your leverage in this is the threat of backing out; don't be afraid to float the idea if you think it will help move the process along.
posted by EKStickland at 12:56 AM on March 28, 2008
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They painted a rosy picture of what the chances were of closing on time, but even fantastically easy deals get snagged at the last minute. A complex issue like changing lenders is definitely enough to slow things down, although there's always a chance things fall into place.
The bottom line: even though it isn't your fault, it's not their fault either. Your broker, while not attentive or helpful in your case, isn't really financially responsible for this. Neither is your real estate agent, unless they knowingly lied about something in the process.
Sorry there isn't a good answer there for you.
posted by shinynewnick at 7:25 PM on March 26, 2008