I Sold My House Twice and This Deal Might Fall Through Too

LoveInTheHouseJune 10, 2011

I sold my house in the winter and two days before closing the deal fell through because the bank didn't like that it was a horse farm. Even though they knew that from the beginning. I lost the house I was trying to buy because I lost my buyer. I lost buyers who were interested in my house until they found out it was under contract. And many other inconveniences and costs. I sold my house again a few weeks ago. I waited until everything looked good before I started house hunting again. I'm moving to another state so this is a big project--very hard to get away because of work, children, animals. So I can't make trips willy nilly. We are in contract and I waited until my buyer's buyer, who doesn't have to sell a house to purchase my buyer's house, had HIS mortgage commitment, inspections passed, etc. THEN I went to the other state and found a house. I was bidding against another person. The main reason my offer was taken because my deal appeared to be a done deal. WELL... today my buyer told me his deal might collapse because his buyer found out he has to buy flood insurance because his property is ten inches inside a newly designated flood zone. His buyer is considering not moving forward because the flood insurance costs more money than he wants to spend and neither of them want to spend about ten grand to remedy the situation. My buyer's buyer has a contingency in his contract about this so he can get out of the deal legally. And here I am again, the second time in six months, maybe putting my house back on the market. Or maybe not because I am sick of it. I can't believe this is happening again. We were so careful, on top of everybody, clarifying and double checking every little thing. I'm sorry. I just had to vent.

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Wow, that's just a bummer! I don't know what to say. I've never had to walk in your shoes, but I bet they're not comfortable.

    Bookmark   June 10, 2011 at 1:20AM
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Sorry to hear about that.

You should stop saying and thinking "I sold my house" though. You didn't sell your house. You got offers on your house. As you are finding out, that is a HUGE difference. It is frustrating, but you need to change your thinking about that or you will be stuck on this emotional rollercoaster.

    Bookmark   June 10, 2011 at 9:11AM
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LoveInTheHouse, I'm so sorry. You have a right to vent after all you've been through. But I hope something happens that it works out in the end - good luck.

    Bookmark   June 10, 2011 at 9:50AM
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too many deals are falling thru because people in the fields are allowed to change their minds, put in a new rule, etc. Are you talking about the 100 year flood plain? Many insurance companies are panicking because of all the floods, especially in the midwest. The areas have not changed, but the insurance companies just want to issue more policies. We are seeing it here all the time. You might find out WHO desginated the new flood zone and why? and how big it is and how it affects other property. Is it only a section? or the entire property?
We are seeing way too much ""politics"" here due to flood issues.

    Bookmark   June 10, 2011 at 11:12AM
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FEMA has recently updated/issued new flood maps.

    Bookmark   June 10, 2011 at 11:58AM
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With just having a small corner in a yard be in the flood zone doesn't cost much if you get the right insurance. We had this on our first house we bought. Were quoted a yearly amount of a couple of thousand and then found FEMA insurance for $200/year.

You might want to find some out and pass it on to your buyer so he can pass it on to their buyer.

Hope things work out. You might want to consider next time to just rent at your new location for a shorter time and then find the place you want. The upside of that is you can look at fixer uppers where you might need a month or so to make it livable as well and you can take your time to find the right one.

    Bookmark   June 10, 2011 at 3:23PM
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The problem with renting is we have a horse farm and boarding six horses would be astronomical and unaffordable for us. Plus I have a child in high school. I can't move her another time. High school is a sensitive time. AND we have a business. When we move, we have to restart business all over again. The chances of finding a place to buy where we'd rent would be practically impossible and we'd have to restart business a second time. I'm about ready to give up. My buyer just told me his buyer's lawyer wants him to pay twenty grand to "remedy the situation," and my buyer said no. He said his buyer didn't care about the flood insurance but his lawyer was pushing it and the buyer was afraid not to take his lawyer's advice, being a first-time home buyer. So it's over.

Marie, I was told FEMA just designated it in a flood zone. Ten inches of yard. They could either pay the extra insurance or pay a lot of money to "remedy" it. My aunt just told me that her insurance company made her buy flood insurance even though she has been in the house thirty years, it was never in a flood zone before and never flooded. If it's not the bank, it's the insurance companies...

Bill, that's a good point. It's not sold until closing. But it appeared we covered every base you could possibly cover and what do I do? Wait until the movers pull up until I make plans for my new life? I have to look into things. I have to get prices. I have to make some arrangements. I have to notify people we do business for. You can't wait till the day you're moving to do all this. I had to call the school to see what I needed. I had to line up hay deliveries. I had to find out where we were going to advertise our business, and on and on. And so you get emotionally and financially involved.

    Bookmark   June 10, 2011 at 6:13PM
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I'm sorry that does make a move tough. Could you do a rent-back with the next contract. Basically you don't move out until the house is closed. The time period you could probably negotiate with your buyer.

    Bookmark   June 10, 2011 at 7:00PM
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"Wait until the movers pull up until I make plans for my new life? "

Unless you have money to cover 2 mortgages, I don't see how you have much of an option. This is just reality in 2011 home sales. You certainly need to look into you options etc, but you shouldn't lay out too much money until you are actually sold. That is why I posted in your other thread that you shouldn't look for a new home until yours is sold. If you are moving to a new town, you should plan on renting to make the transition. It isn't ideal, but it is the best you can do in a bad situation.

    Bookmark   June 10, 2011 at 7:50PM
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Perhaps it's time to get a professional involved. Their experience with the process and emotional distance from the sale seem to be sorely needed.

Or maybe your idea of moving to a new location at this juncture is not really feasable. You have too many encumberances to just be able to pick up and move. Getting a mortgage is going to be impossible with a new business, and even making your business a success in a new location is extremely risky.

What is so attractive about the new location? You seem to have all of your requirements where you currently live and none of the problems that doing such a complicated move will bring.

What if you did a commute living arrangement where you or your spouse moved into a rental at the new location and went ahead and started the business. You could commute until your child finished school, and then downsize quite a bit, sell and complete your move. Most people are into the horses mainly for the kids, so it could be a substntial downsizing that could make things tons easier. The big upside to that would be less disruption to your child and a much longer established track record for your business in your new loation. It would make getting any loan much easier, plus you'd have much more knowledge of the location and it would be less stressful than trying to pick out a house on a weekend visit.

    Bookmark   June 10, 2011 at 8:03PM
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I have to disagree that most people are into horses for their kids. I had to wait to my mid 40's to finally be able to afford horses for me, and that is also true of many of my friends who ride. Older ammies form a huge part of the horse showing community in all disciplines, so I wouldn't be so sure the horses are going anywhere ;-)

    Bookmark   June 10, 2011 at 8:50PM
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With just having a small corner in a yard be in the flood zone doesn't cost much if you get the right insurance.

Perhaps you could get an elevation certificate showing that the house is out of the flood plain. That worked for people that I know several years ago. You would have to have a surveyor out.

Here is a link that might be useful: Elevation Certificate information

    Bookmark   June 10, 2011 at 9:26PM
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Terrible news, I was so happy things were progressing. I'm so sorry.

You might have to 'ride out' this horrible market. I don't think it is worth the emotional stress it is putting on you and your family.

I completely agree with live-wire-oaks suggestion. Maybe take the year to downsize your life before thinking of moving. You have so many factors involved. You could always start up again in your new location when the time is right.


    Bookmark   June 10, 2011 at 9:50PM
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Depending on the elevation of the residence on your property you might be able to get a LOMA (letter of map amendment) from FEMA. The biggest cost is the land survey and if the survey shows the residences bottom board is above the flood plain (even tho the property is in the flood plain)you can get a LOMA. I know we did it. Yes, time consuming, but you might want to go this route before trying to put the house back on the market.
By getting the LOMA we saved $600 a year in flood insurance.
The banks require flood insurance when the property is in a flood plain and you are going to have a mortgage. This came into effect back in the 1980's I was told.
Many people around here have lived in their homes for many, many years, in this lake community. They haven't had to have flood insurance because the homes/cottages are paid for, then the new buyer tries to get a mortgage and BAM, they find out they need flood insurance. that happened to us. 18 hours before the closing. We had to scramble to get the insurance, but..........after the closing we went for the LOMA. The bottom board of our home is 6.1 feet above the flood plain. Because of the LOMA we were able to cancel the flood insurance after giving the bank a copy of the LOMA.
Kathy G in MI

    Bookmark   June 10, 2011 at 11:38PM
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Very good advice Kathy.
You probably should not have accepted a contingent contract in this market. Next time, keep it Active, and tell any would be buyer to give you a call the day his house is sold. Until then, keep marketing your home. We are in the best season.
Maybe you can negotiate something with your potential buyer to reduce your sales price by xxx amount, in order to help him compensate the other buyer. (not $20,000 though). But Kathy's suggestion is the way to go, IMO.
Try your damndest to make this work. Fall is not too far away.

    Bookmark   June 11, 2011 at 7:35AM
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Ncrealestateguy, I thought I covered the bases because I waited until my buyer's buyer had his mortgage commitment, and I waited until the inspections were done and approved, plus he didn't have a house to sell. So you are saying I should wait until my next buyer actually closes on his house? How can someone wait to go house shopping until they close on their house? Don't they have to get out? I can't imagine there are many people who can move twice by renting in between deals. I have a couple of people coming in the next few days. One of them is closing on his house in two weeks. They need a place to move to. What do I do, tell them I can't accept an offer until they actually close? Won't they then go and look for another house that they can make a deal on?

I thought of offering my buyer some more money off to help him pay for remedying his situation. In fact, I expected him to ask me. But he sounded adamant that his deal was over. Maybe I'll try. I will also tell him what Kathy and others said. I got the feeling he thinks his buyer's lawyer used this to try to get more money off the price though. I bet that lawyer said, "It's a buyer's market, you can get twenty grand off for this."

Someone misunderstood. It's not MY house that's in a flood zone.

Live Wire, I'm not getting a mortgage. The new location is attractive because I want to move back home to my family. My mother died last year and I got terribly homesick. Yesterday, my father passed out in his apartment, woke up on the floor and was vomiting blood. I don't know how he didn't hit his head or choke to death. He's now in the hospital and I'm ten hours away. I know the area quite well because I lived there for 44 years. It's my home state. We are not getting rid of the horses because they are our life--not only my daughter's, but my husband and I ride too. It's a lifestyle for all of us and not only that, we are responsible for these animals. You guys gave me an idea though of asking the seller of the house I'm trying to buy if we could rent it while we're waiting to sell this. It's empty. Getting some money would take some of the pressure off the seller and also show him how serious we are so he would maybe give us more time to find another buyer and allow us to stay in contract. I have confidence that I'll sell it again in a timely manner. I've actually "sold" it not twice, but three times since the fall. I don't even count the first lady because that deal fell through so fast (something turned up on her credit report.) What do you guys think of that? This way I'm renting, but I'm not moving twice.

    Bookmark   June 12, 2011 at 1:18AM
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I think its a good idea. Sounds like you need to move and if you can afford it, I would rent.


    Bookmark   June 12, 2011 at 1:21AM
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You only need flood insurance if the HOME is in the flood zone. i think someone screwed up and didn't know much about it. The seller should get with an insurance agent that is experienced in selling flood insurance, then a surveyor that can prove the home is not in the flood zone.

The other posters are correct about the Elevation Certificate, which is issued by a surveyor. This is the document that is submitted for flood insurance and it states if any part of the home are in the flood zone,and then gives required minimum elevation of home based on the rules for that flood zone(for flood reasons) and also same document states the elevation that the home is.

If the home is not in the flood zone, then there are no rules for the home - so I don't see how some modifications were requested. Sounds like they requested the modifications assuming the home had to meet the rules for that corner of the yard...and this is not the case unless the home was located in that corner of the yard.

I think possibly the buyer is wrongly pulling out of the contract - based on wrong information. maybe the seller can force them to go forward with the purchase based on the facts that the home does not require flood insurance. (assuming their "out" on the contract was if the home required flood insurance, and they will find out it does not).

lots of folks just get scared silly over flood zones, and friends and family members probably scare them even more, often with incorrect assumptions and stories about someone they knew that paid large sums for flood insurance or had a bad flood - which is not always the case.

I pay around $200/yr for flood insurance. No big deal.

ALSO - when flood maps change and prior homes where built before the map changes....then the existing homes are grandfathered in because there is no way they can modify their homes to meet the new rules. It is the NEW homes that have to meet the new flood maps. The FEMA rules have dates where homes built after a certain date has to meet those rules. That date is the date the map was changed.

    Bookmark   June 12, 2011 at 8:01PM
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That certainly makes sense. I owned one home,it was a new build in a flood plain, and had to purchase flood insurance. It was not that expensive at the time and I'm looking to see stricter regulations down the road from preventing new builds on flood plains. Nothing is stopping you from educating yourself on the flood insurance issue and a call to your own agent might be in order, in case sweet tea is right. If the other party is right.....and it is going to be an issue, you might have the option of ceding that small section of acreage to the adjoing property owner who is in the flood plain, and get your little section out of it.

    Bookmark   June 13, 2011 at 1:44PM
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Sweet tea, I am going to copy everything you said and send it to my buyer. I don't know all of the exact details because it's his deal with his buyer, but that sounds hopeful. Calliope, what you said is a good idea too. Thanks everyone!

    Bookmark   June 13, 2011 at 11:13PM
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Sorry to hear you're having trouble with your buyer's buyer.

I think it is an excellent idea to try to rent the property you're interesting in buying if you can manage your current mortgage payments and the new rent payment for several months.

We just closed on the sale of our house. And, about a week before closing we got under contract to purchase another house. I still think we were quite lucky that our sale went smoothly. We're renting back for 45 days and our buyer would've given us more time, if needed. So, a rent back agreement might work for you next time, if this deal falls through.

    Bookmark   June 14, 2011 at 9:26AM
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Congratulations Maurenemm!

    Bookmark   June 15, 2011 at 11:47PM
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Update. It appears that my buyer might be able to salvage the deal with his buyer. I kicked in some more money, both realtors kicked in some money, and that helped him come to an agreement and "buy" his buyer--he was able to drop the price to "remedy the situation." But now there is suddenly an issue about the mortgage. I will make a new post so I can your opinions on this.

    Bookmark   June 16, 2011 at 11:26PM
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