Short-sale purchase price not set in stone

Home Sale Hindsight

Q: I’m buying a short sale. We have a signed purchase agreement from both parties. Everything was fine, but now (a month later) my mortgage (broker) said the bank did an appraisal on the property and now wants to increase the price by $5,000 and make other changes to the contract. She says they have that right — is this true?

The purchase agreement has been signed and I have talked to the bank. My lawyer said to sue them, because it should be pending unless we back out of the deal or something else happened that was our fault. –Patty

A: Before around 2007, most Americans had never heard of a short sale, and certainly didn’t know anyone who’d either bought or sold via this transaction format if they had heard of it. But the short sale came back into vogue when subprime mortgages began to reset and home values began to drop, leaving about a quarter of American homeowners "upside down," or owing more on their homes than the homes are worth.