Regzrdless don't spend any more time on the Internet seeking advice, get a hold of a lawyer today , have them review your contract and have them either get you out and your deposit returned or pressure the builder to reduce the price to a level you can live with.
By the way if you're not working with a Realtor this is an excellent example of why buyers should have their own Broker. IF you are working with one, why aren't they advising you?
I wish you good luck.
Here are some possible options or items to consider:
1. Appeal the appraisal. The underwriter may allow the use of additional comparables from sales that are a little older or a bit farther from the subject than they normally use if necessary to support the value.
2. Increase your down payment if you are willing and able to do so.
3. Increase your loan amount. At even a penny over 90% puts your PMI in a higher bracket and could increase the monthly premium by 50% or more on conventional loans but you need to check with your loan officer because it may not even be available at all for your situtation. FHA financing would allow a smaller down payment if the other options don't work, but would add additional Mortgage Insurance Premium (MIP) to your loan amount and they may not approve your home in some cases.
4. Pay the difference - if you're paying cash and a loan is not involved and you really like the house and you think you can get your value back later down the road, then it may turn out to be a good investment. But that depends on the market value ath the time and not what you think it is worth.
5. Renegotiate. Even though the builder says they won't renegotiate, I'd go back again and tell them you are going to walk. Buyers can be hard to come by these days so the builder may not want to risk going back on the market again.
6. Last resort - you could go to court and try to get the difference back depending on the contract. As real estate professionals, we are prohibited from giving legal advice so it is in your best interest to seek the advice of an attorney and get legal help on this issue.
Brought to you by Charlotte Housing News -
First thing I would do is look at the contract you signed. Just about every contract (including a builders) has a provison for the appraisal. Read it over with your Realtor (i hope you have one and not the builder's Realtor).
Second, ask to see the appraisal. have your Realtor look it over and make sure the appraiser did not miss anything on the house you are building. Appraisaers are human and could have made a mistake..
Third, ask to see what the other houses in that neighborhood sold for comparably equipped.
The hard part for any of us is not knowing if you singed a contract on a builder form or the North Carolina Realtors form. it makes a difference in the advice we give you. Builders contracts are not designed to be friendly for the buyer and protect the builder.
I guess there are several questions before this question can be answered: 1) is this a new home that was built to your specifications or was this an inventory home the builder had on hand already. 2) Did you sign the builder's own contract (probably) and what does it state as far as appraisal goes.? 3) Do you still want the home and who did the appraisal? 4) Did you have an agent who could help you sort all this out? If yes, they could maybe get a second appraisal in case the first one is not in line with comparative properties in the area. 5) When did you sign this contract and what did other homes in the neighborhood sell for?
Once you answer these questions it should become clearer what, if anything, is possible to be done. You should consult a real estate attorney to help you with understanding your options.
I hope this works out for you,
Jack Gillis, M.B.A., J.D.
Nathan Grace Real Estate
5619 Dyer Street | Suite 100
Dallas, TX 75206
There are many good questions being asked. However, one question remains: "Do you still want and like the house?" And " What do you believe the house is worth?" An appraisal is subjective to some extent. Do you have a copy of the appraisal in hand? One needs to see what comparable sales were used and how those sales were evaluated. The next step would be to speak with the lender and appraiser to get their thoughts. After that, a 2nd appraiser should be consulted. Once two appraisals are completed, then you have two professional opinions on value. It would be better to resolve this problem out of court if possible. In all probability, you are going to need a real estate attorney to review your contract and advise you of your options. If you have a realtor, then that realtor may have an attorney suggestion for you. I would be happy to provide attorney references to you.
What type of financing are you using? Is it FHA or VA?