topic Re: HELP!!! 1 week from closing seller may pull deal! in Mortgage Loans

HELP!!! 1 week from closing seller may pull deal!

izzesparks — Wed, 21 Oct 2020 20:04:58 GMT

Hi everyone!

I am panicking, just got a text from my realtor stating the seller can pull deal because he did not want an FHA loan. Backstory: I got a pre-approval from 4 different lenders while shopping. I chose the lender in my state of Georgia that would service the loan the entire life of the loan, and it was conventional which is what I wanted so I didn't have PMI forever. Big mistake, could never get her on the phone had to call her supervisor a few times to find her, she missed deadlines and would request steps that weren't necessary like removing a late from 5 years ago. I did not have time for that. I dropped her and went with another lender that is awesome. Only issues is this lender can't give me conventional due to DTI because I am on reduced covid hours at work. So the loan is now FHA.

The seller reached out to the first lender asking about the appraisal, only to find out I am not with that lender any more and has requested the new pre-approval. The new pre-approval is FHA and my realtor said she thinks he did not want FHA loans and can still pull out if he wants a week before closing!!

We already did the inspection, he completed repairs, appraisal has been done just waitingon results. Can he still really pull out? I didn't know he didn't want FHA. Shoot I didn't want FHA either was trying to avoid paying PMI forever.

What do y'all think?

Re: HELP!!! 1 week from closing seller may pull deal!

BillSmiff — Wed, 21 Oct 2020 21:53:02 GMT

Not knowing real estate contract details in your State but in AZ changes to buyer financing must be disclosed to seller in writing & failure to do so results in a "breach" of contract...sets other variables into play.

FHA loans (as any traditional loan lets just say for the most part) can have the seller paying (buyers lender approved) money towards buyers costs:

1. If you did not request assistance from seller then the net proceeds to the seller would be the same with FHA financing. Your Realtor should know that & explain as much (& put in writing in an addendum to the purchase contract & have you & seller agree & sign of course).

2. Your lender should have presented any changes in your loan terms to you so if your Realtor is not explaining to the seller then your lender should ASAP to try & appease them.

3. If the seller is looking for an out & you've breached the contract then this may be it depending on your states real state purchase contract rules.

Since I cannot go back & read your post I don't think without losing this quick message....you wrote all inspections are complete? Check mark on your side as a new buyer will take time to be found (unless seller has one in back pocket w/ a higher offer) have to do their own inspections etc & seller would hope that more items would not be found (in AZ seller is to disclose up front issues they know & also new issues that arise from inspection reports). Seller may risk new buyer cancelling based on Inspection, buyer could lose job, flake out, change their mind, pass away....so in my long winded way you can close as agreed time wise (unless FHA will delay) so it would be in sellers best interest to move to closing with you.

As for appraisal, an FHA appraisal may open up other issues but a knowledgeable Realtor & or lender would educate/placate seller or sellers Realtor if they were not familiar w/ FHA & you would be good to go.

You can always write an adddenum to contract (if seller will agree) that if the COE does not occur as originally agreed then "___________" this will be the remedy.

***** Lastly, make sure your earnest $ is addressed if the seller does manage to back out & that it is returned to you. Again, Realtor should protect you in this & frankly the whole process up to now if they have not already.

**** For sure lastly this time; if the sellers Realtor is representing both you & seller then this changes everything & you should be able to Close as they are supposed to guide, protect & advise your neutrally & they would not have done this & risk a complaint to the States Board of Realtors....you'd have to share this with them of course.

Please follow up & share as you progress along. Good luck.

AZ Realtor

Sorry again if I missed some points in your post as I'm not sure I can go back to re-read w/out losing this novel I'm writing!

Re: HELP!!! 1 week from closing seller may pull deal!

BillSmiff — Wed, 21 Oct 2020 22:06:49 GMT

Follow up:

You have a Realtor I re-read.

1. They should have read the MLS listing that the buyer would not entertain FHA financing. Your Realtor should already have reached out to seller or their Realtor as to why at this point??? You have valid reasons why the seller should proceed.

**** If your lender has not submitted your purchase contract to underwriting then I suggest writing a whole new one up (once you & seller agree) & you can take this new opportunity to maybe modify anything that the seller has against FHA-let's say increase sales price slightly for their troubles or if you need seller to contribute to the closing costs per your FHA loan. You would have to do an addendum to purchase contract anyway addresssing the change of financing & this would be cleaner for underwriting anyway....get that lender of yours thinking & helping out!

Conventional & FHA appraisals are different as I'm sure you know. This may be why seller does not want FHA but that could be chalked up to not knowing details of what an FHA loan is...again, talk to your lender & Realtor as the more I think about this the inspection "paperwork" asking for repairs etc may have to be re-wrote too...ask lender & Realtor ASAP as your deal can be saved....only a week away to COE I see but deal can be salvaged for everyone's benefit but closing I'd imagine will have to be extended.

Re: HELP!!! 1 week from closing seller may pull deal!

NC_Mtg_Loaner — Thu, 22 Oct 2020 00:10:04 GMT

Typically, your contract/offer to purchase will state the type of financing you are utilizing.

IT would seem silly that a seller would object to FHA financing unless they had been advised by their agent that they felt the home wouldn't qualify for FHA financing in which case could be an issue for whomever has "misread" or "mis-interpreted" the offer to purchase.

Excluding FHA financing by a seller only hurts the seller and limits the clientele that can purchase a home but if they advertise the listing as such you could be stuck unless your offer documented your intent to use FHA and then the seller signed it.

Hopefully, y'all can work it out.

Re: HELP!!! 1 week from closing seller may pull deal!

izzesparks — Thu, 22 Oct 2020 13:17:16 GMT

@BillSmiff wrote:
Follow up:

You have a Realtor I re-read.

1. They should have read the MLS listing that the buyer would not entertain FHA financing. Your Realtor should already have reached out to seller or their Realtor as to why at this point??? You have valid reasons why the seller should proceed.

**** If your lender has not submitted your purchase contract to underwriting then I suggest writing a whole new one up (once you & seller agree) & you can take this new opportunity to maybe modify anything that the seller has against FHA-let's say increase sales price slightly for their troubles or if you need seller to contribute to the closing costs per your FHA loan. You would have to do an addendum to purchase contract anyway addresssing the change of financing & this would be cleaner for underwriting anyway....get that lender of yours thinking & helping out!

Conventional & FHA appraisals are different as I'm sure you know. This may be why seller does not want FHA but that could be chalked up to not knowing details of what an FHA loan is...again, talk to your lender & Realtor as the more I think about this the inspection "paperwork" asking for repairs etc may have to be re-wrote too...ask lender & Realtor ASAP as your deal can be saved....only a week away to COE I see but deal can be salvaged for everyone's benefit but closing I'd imagine will have to be extended.

Sorry! I had midterms all day yesterday could not get back on to reply!

So I have an update and more info. Apparently the seller is a flipper and did not have the house for 90 days at the time so could not accept FHA loans, but has the 90 days now and they are doing an admendment. Not sure if he is going to accept it I pray so. Also we already completed inspections and he has already completed all the repairs there weren't very many. Hopefully the appraisal doesn't find many either.

I made my realtor aware of the new lender as soon as I decided and sent her the approval letter, but I don't believe she looked because the deal was already happening.

I went over the listing pricing and opted to pay all the fees myself. So the seller isn't paying anything at closing. This was my 6th offer on a house, kept getting beat out with multiple offers. Last house had 15 offers and went 45K over asking. So I didnt want to lose this one by asking for closing cost.

Re: HELP!!! 1 week from closing seller may pull deal!

BillSmiff — Thu, 22 Oct 2020 17:29:40 GMT

Seems you made a smart offer based on your recent experience & seller would be foolish to not accept a change to FHA @ this point considering it is last the 90 day range.

Yeaterday was my first post & did not realize I could refer to your post so sorry for not being thorough. Was in parking lot waiting to pick up my neighbor from his Doc appt & had my eye on door for his exit as office was not allowing anyone inside so I was a bit distracted.

As other commenter wrote (I cannot see their post to give credit) much more professionally than I- the reluctance to accept FHA was in fact due to the "90 day rule" which is solved now. If the seller walks away now they are back at square one so logic says they should proceed with you.

Since your Realtor is a bit responsible for this issue I would strongly recommend getting with your Lender & confirming how any new docs/amendments to the contract are written so they will work w/ underwriting. Reading the previous posters comments you can see what a professional lender can do as a trusted source. They have their minds in every aspect of the paperwork whereas Realtors do not see or know frankly what goes on in the lending process from app to UW to COE.

Good luck.

Re: HELP!!! 1 week from closing seller may pull deal!

BillSmiff — Thu, 22 Oct 2020 17:35:09 GMT

Well written; as a Realtor for almost 21 years I cannot say enough how a professional Lender can make a deal happen even when clients & Realtors have run out of options. As you know, I as a Realtor have no idea how many times deals have been salvaged behind the scenes!!!

Thanks for making things clear for the poster; my writing at the best of times is scattered...was trying to multitask yesterday when I replied.

Re: HELP!!! 1 week from closing seller may pull deal!

Anonymous — Mon, 26 Oct 2020 19:59:51 GMT

Whether or not they can pull the deal is completely dependent on the purchase & sale agreement.

If there is a contingency based on it being a conventional loan, or language around the sale being contingent on the details of the pre-approval letter (which stated conventional) they can pull the offer.

if not, they would have a really hard time doing so. most P&S protect the buyer. it is alot tougher for the seller to pull out