Thank You all for the advice. Highly appreciate it.

I have told my Attny to change the down payment to 10% without which I am not going thru the deal. Thank you all once again. God Bless!

hi dan......first of all, have you signed and agreed to the seller's counter including the clause about putting 20% down?..if not, then don't sign it...there are too many deals out there to be found without overpaying for this one.....next.....the attorney really doesn't care if you are overpaying for the home..what the stip means is no matter what the appraised value comes in, you have to buy the home....very, very unfair....i have done mortgage lending in michigan for over 14 years and have never heard of a seller even attempting to dictate how the terms of the buyer's downpayment...unless it involves seller financing like a land contract...or lease with option to own....i would consider filing a grievance against the attorney but only after you back out of the deal......let your mortgage lender review your credit and credentials and based upon what he sees, issue you a mortgage denial...the house is probaby close to upside down and the sellers and their attorney wants you to inheret and solve their problems for them..best of luck...bob mcclure- success mortgage partners- plymouth, michigan.....

Hi Dan, thanks for asking this question. This very concern was raised last evening by a client of mine and I shared this thread with them. Good dialogue and suggestions. First and foremost, talk with your attorney pronto.

Good luck to you!
Jeannie Feenick
"Unwavering Commitment to Service"
Search and connect at http://www.feenick.com

I am a Realtor in NE Ohio...not a Real Estate Attorney which is why first and foremost you do need to pose these questions to an attorney.

In reading your post, my interpretation of your situation is that the sellers agent and the sellers attorney are doing their job working for the seller. The fact that you posted the question on Trulia makes me wonder where your buyers agent is and if you are working with an attorney as well.

Based on your question it appears that the sellers agent has concerns that the property will appraise for the negotiated price (red flag #1). By asking for a higher down payment and the attorney adding the non escape clause if the home does not appraise, in my opinion, YES they are locking you in to the contract IF your lender will still approve the loan with the 20% down IF it falls within their LTV (loan to value) ratios that are acceptable to them for you as a buyer. (red flag #2) On a side note, this may still raise a red flag for the loan underwriters and put your approval into question depending on how much below the purchase price the property does appraise at.

This is definitely a situation where you should have an ATTORNEY review your interests in the agreement prior to signing. You just need to be fully informed on what you are doing. If this home is the PERFECT home for you and you are planning on living there for quite some time, only you can determine if it is worth it to pay a premium price for the property in today's market realizing that it will impact your ability to resale until the market starts appreciating.....as long as you have the resources to do so.

As mentioned earlier the FHA purchase does address this situation and all involved parties are required to attest to the fact (no matter what the down payment) that the property is appraising for the purchase price....this is the buyer, the buyer's agent, the seller and the sellers agent. I'm sure part of the reason this was made a part of all FHA financing packages was to guard against mortgage fraud, but also to protect the interests of the parties that have the potential to take a loss...the mortgage lenders and the buyers.

Be fully informed and make the decision that is best for you and your interests....hopefully with the assistance of a Realtor that is working for you and negotiating on your behalf as well as an Attorney that is looking out for your interests when terms and conditions are questionable or off standardized contracts in particular.

So in your headline you stipulated that you just “concluded” your attorney review period. Did you have this agreement of sale reviewed by a licensed attorney?

Based on the amount of money down (10 or 20%) I am assuming that you’re going with conventional financing - Is this correct? What the seller is telling you is that if the appraisal comes in low that they want you to pay the different between the properties appraised value and the sale price.

When you’re purchasing through FHA, there is a separate document called the “FHA Amendatory Clause” that is attached to your agreement of sale. This document has a kick out clause for the buyer in the event that the property does not appraise at sale price. Conventional mortgages do not offer this same addendum. So your offer should be contingent upon the property appraising at sale price.

If you haven’t already done so, talk to an attorney. Based on your initial post I can’t see any attorney giving you a green light on this agreement of sale under those terms because it is slanted in the sellers favor.

Hi Dan,

I agree with Bill Holt as he is on the money in his response.

I will also preface with the statement that I am not an attorney and this is not legal advice, but my opinion, the clause that you speaking of seems to have a lot to do with this article on CNBC, By: Diana Olick
CNBC Real Estate Reporter: By: Diana Olick http://www.cnbc.com/id/31509964

And as your Realtor in the process of negotiation, I would also tell you to walk on a transaction that would exhaust your resources.

I want to add that ANY advice to you regarding your transaction. ; speculative or otherwise.; .makes anyone outside of this transaction, liable.

You are on your own, as is the over-eager Real Estate agent who posts any advice .......esp an NJ agent.

Ask your attorney what comes next.

Yes, your attorney can & should counsel you regarding your LEGAL options.

But at the very least, your agent should be able to guide you with any options that don't fal under the realm of contractual legal advice.

WHERE IS YOUR AGENT ?

Dan: At this point, you need legal counsel. No Realtor, except those licensed to practice law, can interpret your legal rights or write contract language that protects your interests. PLEASE do not take any advice from anyone on this site who is not an attorney.

The conditions under which you are being asked to complete this sale are pretty tough. Unless you have reserves to meet almost any amount of appraisal shortfall, you may well be so over-burdened that you will go bankrupt. It can be that serious.

As I understand the situation, (and I truly do not. In the first place, I can't see the documents and in the second, I am not licensed to practice law.) you really have no contract at this point. If you have an attorney who reviewed your contact (as opposed to only the seller taking advantage of this option,) ask him or her where you stand. Usually, ANY change demanded by an attorney is preceded by the phrase, "this contract is void but would be reinstated if..." or words to that effect. If so, you are at least not obligated to take on more than you can manage at this point.

Since there are multiple offers on the property, you are faced with a seller who wants an ironclad deal. It may be that you are not strong enough to give him, her or them that deal. On the other hand, there may be no one else who can either! Yours may still be the highest and best offer that the seller will get.

As a Realtor, I can give you advice as to negotiation and my advice, were you my client, would be to walk away from ANY deal that was going to exhaust your resources before you even went to closing. There are other houses that you can make your home, and, just as you could not afford the Rockefeller Mansion, (I recommend the tour.) you may find that you really just can't afford this one but can find something that will be a comfortable home. This one sure won't be, if the sheriff comes knocking for default.

Lots of Luck.

Bill Holt