Lost home purchase deposit due to bad advice.

[FallenHero]

Why did they put such a high deposit in? When I bought my house the agent said the deposit was optionable, but looked good to the seller. I only put in a few thousand.

This is what I'm wondering. Generally, a 1% asking price deposit is accepted. Unless this house is a million dollars, why would you throw in 10k?

 

[Vdubchaos]

This is what I'm wondering. Generally, a 1% asking price deposit is accepted. Unless this house is a million dollars, why would you throw in 10k?

Not only that

Why would you throw in 10k when you can't even get accepted for a freakin FHA loan.

I don't get it.

 

[waggy]

This is what I'm wondering. Generally, a 1% asking price deposit is accepted. Unless this house is a million dollars, why would you throw in 10k?

when i was looking (roughly 10 years ago) everyone was asking for 3-5% deposit.

i agree though. why would you put 10k down?

 

[olds]

This thread is confusing.
What's the consensus: People lost their deposit because they couldn't close?

 

[DCal430]

The home price was around 700, 000, which is close to FHA max.

 

[SheHateMe]

That must have been a nice house for $700,000.

 

[SunnyD]

This thread is confusing.
What's the consensus: People lost their deposit because they couldn't close?

Buyers made a HORRIBLE decision trying to get a loan that has quality contingencies on an As-Is home.

Actually, they made a horrible decision based on feedback by a horrible agent/broker because they are completely uninformed.

The take-away here is that the home was listed AS-IS, and the buyer didn't cross their T's and dot their I's to cover their own asses.

"A fool and their money shall soon be parted."

 

[Capt Caveman]

Their agent told them it would take 3 days for FHA approval, no need to inform the seller, their would be no delay, after 3 weeks FHA gave their 3rd and final rejection.

The agent is an idiot. They should have requested an extension when they realized they weren't going to hear back before the financing date.

Options:
1. Hire a RE lawyer to review the situation
2. Negotiate with the seller for only a portion of the deposit b/c the buyers need to sign-off to release the deposit. And if you don't their only option would be to sue and then try to collect.
3. Meet with the RE agent's manager and get them involved in the situation. Negotiate that they cover part or all of the loss deposit.

 

[DCal430]

I assume REO are almost always sold as is, is this correct.

 

[DCal430]

The agent is an idiot. They should have requested an extension when they realized they weren't going to hear back before the financing date.

Options:
1. Hire a RE lawyer to review the situation
2. Negotiate with the seller for only a portion of the deposit b/c the buyers need to sign-off to release the deposit. And if you don't their only option would be to sue and then try to collect.
3. Meet with the RE agent's manager and get them involved in the situation. Negotiate that they cover part or all of the loss deposit.

The seller is Bank of America, but they still have some hope BoA will be willing to give some of the deposit back.

 

[DCal430]

Is it good or bad for real estate agent and mortage broker to be the same person.

 

[SunnyD]

Is it good or bad for real estate agent and mortage broker to be the same person.

Not quite necessarily bad. Self-service, but not really any different than having a referral for a broker by your agent, which is all well and good.

But if your next question happens to be whether if it's bad that the buyer's agent also happens to be the seller's agent (and is also the broker)... then yes, your friends got taken for a ride and had "SUCKER" written all over them.

 

[waggy]

Not quite necessarily bad. Self-service, but not really any different than having a referral for a broker by your agent, which is all well and good.

But if your next question happens to be whether if it's bad that the buyer's agent also happens to be the seller's agent (and is also the broker)... then yes, your friends got taken for a ride and had "SUCKER" written all over them.

personally i would never have the agent for seller and buyer. seems like someone would be getting screwed.

 

[SunnyD]

personally i would never have the agent for seller and buyer. seems like someone would be getting screwed.

Oh most definitely. Ironically, when I bought my house, it DID work that way though. Why? New construction through a homebuilder. My "agent" really was the seller's agent - and he made it a point to point that out when we started the contract. Thankfully with the homebuilder, their really wasn't terribly much to deal with, and the agent himself was a very stand-up guy.

But for an existing home, HELLS FUCKING NO WAY.

 

[richardycc]

When you sign a home purchase contract it does state what loan type you will get and from whom. They seller must agree to this. If you switch loans and it goes through all is fine, but once it falls through you forfeit your deposit. They were unaware of this, relying on what the agent told them.

So yes a seller does have a say in what loan you can get.

So technically they never got the loan from the source stated in the P&S, they would be able to get their deposit back. They will most likely need to file a lawsuit to get the seller return the deposit. Seriously thou, unless the buyer doesn't want the house anymore, if there isn't another buyer waiting, they should be able to get the seller to agree to an addendum to extend the deadline.

 

[Vdubchaos]

Is it good or bad for real estate agent and mortage broker to be the same person.

It's a BAD idea to even deal with a mortgage broker all together.

But it doesn't matter, neither really works in your favor and BOTH are there to make money OFF of you.

To get advice/opinion from such people is just stupid.

The seller is Bank of America, but they still have some hope BoA will be willing to give some of the deposit back.

BWAHAHA

you owe me a new keyboard!!!!

Good luck on that.

 

[SunnyD]

So technically they never got the loan from the source stated in the P&S, they would be able to get their deposit back. They will most likely need to file a lawsuit to get the seller return the deposit.

Technically no, but they also never tried in good faith to get a loan from that source either (regardless of the fact that they were misguided by their agent/broker). Had they tried and failed, this would be a completely different scenario.

 

[Kelvrick]

you do realize, that as a buyer, you don't have to pay the agent at all, right?

In a way, you do. The seller (usually) pays 3%. Now if they don't have to pay that 3% to your agent, you can often get them to come down on the price of the house.

I bought my REO house "as-is" with an FHA loan. In the end, we got the bank to kick in 3k for needed repairs and we got the house fixed ourselves.

 

[PingSpike]

The seller is Bank of America, but they still have some hope BoA will be willing to give some of the deposit back.

Bank of America would anally rape your grandmother with a hammer for a nickle. Abandon all hope.

 

[PingSpike]

you do realize, that as a buyer, you don't have to pay the agent at all, right?

Not directly, no. Indirectly the buyer is the only one paying either of the agents when a sale is made.

 

[FallenHero]

The home price was around 700, 000, which is close to FHA max.

That's jumbo loan area. Why on earth would you do FHA if you are looking at a house at that price? At 10% down, they need 70k, 20% and you are looking at 140k...still a 560K loan conventionally. No way would FHA risk a loan that size without being sure of the house, and why your friends did not hire an attorney when looking for something that expensive is beyond me.

 

[Legios]

Having recently purchased our second house, NOT having an FHA loan made us that much more attractive to sellers since the requirments inspection wise for the house are put under a microscope. I would never just go on the word of someone when unrefundable money is on the line. Why didnt they tell the seller they were thinking of switching?

 

[Hugo Drax]

When you sign a home purchase contract it does state what loan type you will get and from whom. They seller must agree to this. If you switch loans and it goes through all is fine, but once it falls through you forfeit your deposit. They were unaware of this, relying on what the agent told them.

So yes a seller does have a say in what loan you can get.

This is what happens to people too cheap to hire an attorney and work with a good buyers agent.


They are screwed on that 10K

 

[BoomerD]

We're in a somewhat similar situation. We have our house listed for short sale...all approved by the bank...it was SUPPOSED to close right after Christmas...but the buyer's credit fell through.
Apparently she "was the victim of identity theft" and there's some "fraudulent activity" on her credit...they promised us that it was all taken care of...and that her bank had accepted the corrections. The day before the close...the bank's underwriter said "NO!"
The buyer cancelled escrow and (1) demanded that the cost of the home inspections be paid out of the deposit, and (2) the balance of the deposit be refunded.

So far, (1) they have had to pay the cost of the home inspections themselves...they requested the work...it's on them to pay for it, and (2) we've refused to release the deposit from escrow.
Since it's a short sale, we're prohibited from "profiting" in any way, so we won't get the deposit...it will go to the state of California as "disputed funds."

While it's possible that there was some identity theft and fraud committed that was outside the control of the buyer, I can't believe that the bank didn't throw up red flags prior to going into escrow...and that if that was the case, why it wasn't caught until the day before closing.

IF the realtor company's attorneys tell us to release the deposit, we'll do so...reluctantly. (once we had accepted the offer, we turned down several other offers...my wife wanted to see the house go to a family who would live in the house rather than to an investor who would just rent it out...we're about to go BACK into escrow with an investor buying the house.)

 

[SunnyD]

That's jumbo loan area. Why on earth would you do FHA if you are looking at a house at that price? At 10% down, they need 70k, 20% and you are looking at 140k...still a 560K loan conventionally. No way would FHA risk a loan that size without being sure of the house, and why your friends did not hire an attorney when looking for something that expensive is beyond me.

Yeah, once it let slip that it was a $700k house, that was an immediate red flag. There's no wonder why the seller (in the case a bank) didn't want a FHA loan - because they knew LTV and condition of the home would never get approved.

Then again, given that it sounds like the agent/broker in this situation... well, your friends had SUCKER written all over them DCal. And they proved it.