Home Buying in San Diego>Question Details

Sdnewbie, Home Buyer in San Diego, CA

Can the seller back out of a deal with no explanation during the appraisal process?

Asked by Sdnewbie, San Diego, CA Fri Mar 23, 2012

Our appraisal came in 10k below the purchase price that we had agreed on. We asked seller if we could renegotiate based on the appraisal value, and right away they told us we had to put in an extra 5k or there's no deal. We never got any addendum to the contract to sign, and the listing agent went ahead and tried to cancel escrow before we could even tell the seller that we would just agree to pay the 5k. What can we do?

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You and the seller are bound by the terms of your offer to purchase and escrow instructions - review them carefully. The seller and/or the listing agent cannot cancel the escrow and you cannot get your escrow deposit back until the seller and buyer both agree.

If you are represented by your agent, have your agent deal with the listing agent. If that agent lacks the 'wherewithal', contact the broker of the office. If you are not represented by your own agent and the selling agent is representing you and the seller, contact the listing agent's broker if the listing agent is overbearing.

Normally a motivated buyer and a motivated seller will find common ground. The seller does not have to agree to a lower purchase price, that's true. But, calmer minds and understanding of each wants and needs, will find a way to make the sales happen.
2 votes Thank Flag Link Fri Mar 23, 2012
In my little corner of the world the seller is only obligated to sell at the original price in the contract. It doesn't matter what the appraised value is unless that issue is addressed in the original contract.
0 votes Thank Flag Link Sat Mar 24, 2012
The explanation is that they aren't getting the price they thought because their property didn't appraise. While both parties have to agree to cancel, it hardly makes much sense to hold the other party hostage if there isn't a meeting of the minds.

If you don't overpay, do you really think someone will? Usually not. This is where you have to look at days on the market, comps, and decide how to negotiate. The cancellation effort is a ploy to see how bad you want the house and will test your agent's ability to negotiate.

This is why they say to never fall in love with a home you are trying to buy because to be in the best negotiating position, you have to be willing to walk away. Of course, if you just have to have the house and don't want to risk losing it, you'll cough up the money.

Vic talks about calmer minds and I agree with what he says, Unfortunately, emotions are also at play, which spices up the situation. Good luck!

BeachBrokerBill
CA DRE 01775528
0 votes Thank Flag Link Fri Mar 23, 2012
By the way....If you signed a contract by you and the owners, then No he cannot back out of the deal! That's legal grounds to sue the seller, speak with your lawyer he should already know this and can advise you on what to do. If you don't have a lawyer get one, I wish you the best! Jeannette Batsikas
0 votes Thank Flag Link Fri Mar 23, 2012
If you didn't sign any contract then I'm sorry to say but there's not much you can do. If you really love the house call your agent and if she/he doesn't help you go directly to the owners broker. I hate to tell you that but if the agent is not doing there job you don't need them. If all else fails did you ever think maybe something or someone is trying to tell you something; like this house may not be for you. Take it as a blessing, I know it will hurt but there's plenty of other houses that are on the market or will be coming on the market. Wish you the best, Jeannette Batsikas.
0 votes Thank Flag Link Fri Mar 23, 2012
At this point, if the seller is not willing to lower the price then you need to come up with the additional money between what your lender will lend on the home and the purchase price. Either that or you will need to cancel the escrow. The seller is not obligated to lower the price.
Good luck,
0 votes Thank Flag Link Fri Mar 23, 2012
As everyone has stated below, there must be an addendum outlining the additonal 5k. I would be asking your agent some serious questions as to why they are not controlling this transaction with the sellers agent.
The seller absolutely cannot cancel this binding agreement.

You may want to consider going directly to your agents broker if your agent is unable to handle the situation. I have to agree with the other agents, it certainly sounds like there is some "strong arm" tactics they may be taking place.

Best of Luck!

Diane Kephart
Prudential California Realty
Del Mar, CA
858-525-5402
dkephart@prusd.com
0 votes Thank Flag Link Fri Mar 23, 2012
As everyone has stated below, there must be an addendum outlining the additonal 5k. I would be asking your agent some serious questions as to why they are not controlling this transaction with the sellers agent.
The seller absolutely cannot cancel this binding agreement.

You may want to consider going directly to your agents broker if your agent is unable to handle the situation. I have to agree with the other agents, it certainly sounds like there is some "strong arm" tactics they may be taking place.

Best of Luck!

Diane Kephart
Prudential California Realty
Del Mar, CA
858-525-5402
dkephart@prusd.com
0 votes Thank Flag Link Fri Mar 23, 2012
No. The only way a seller can back out of a deal if if the buyer has failed to live up to his or her obligations. The seller can say 'no' to repair requests or any other type of request, but they cannot unilaterally cancel.
0 votes Thank Flag Link Fri Mar 23, 2012
Hi Sdnewbie-
Keep in mind that the listing agent cannot unilaterally cancel the escrow on behalf of the seller. As pretty much everyone below has stated- Your Agent Should Be All Over This (wish I knew how to underline, and bold on here). Prime example of buyer's agents value and importance in the negotating process.

Best of Luck!
Sinead McAllister
858-205-5215
brokermcallister@gmail.com
0 votes Thank Flag Link Fri Mar 23, 2012
The seller just can't walk away from a contract without some complications. Should the sellers be asking for an additional 5k there should be an addendum to your current binding agreement.

I would be meeting with my Agent to discuss the process and see all the documentation you have. If your still wanting to move forward with the deal your agent should be able to show and explain to you in great detail how the process works.

The seller may be trying to strong arm you into paying more than you may needed to as you are know emotionally connected.

Best
Ben C
Principal Broker/Partner
Colby Real Estate Inc
New London NH
0 votes Thank Flag Link Fri Mar 23, 2012
Where is your Agent in this process?

If you have decided to pay an extra 5K out of pocket (overpay) your agent should be communicating that to the Listing Agent in the form of an addendum if one has not been sent to you. (It can be written up by either agent). It sounds like a communcation break down. Ask your agent to resolve this quickly and connect with the Broker if the Listing Agent is not responding.

It could also be a strong arm technique to get you to panic in order to pay the extra $5000.00. Unless there are more details that you are not explaining, this should be simple to resolve.

Additionally If the seller cancels (w/ any contract penalties), they now know what their property is worth and may not be able to get a better price with a new offer and starting the process all over again. I doubt they really want to cancel.

Kind Regards,

Marcie Sands, REALTOR
Simply The Best Real Estate Co., Inc.
760-644-1562
0 votes Thank Flag Link Fri Mar 23, 2012
SDnewbie~

Are you represented by a Buyers Agent or is the Listing Agent representing both you and the Seller? The escrow cannot be cancelled at this point without your signature. You are the one who holds the position of whether to cancel or not. This illustrates one of the many reasons to have representaion by a Buyers Agent, and if you do...your Agent will be able to help you through this. Best of Luck!

Chris Gorno
Windermere Real Estate SoCAL
(619)788-4345
http://www.ChrisGorno.com
0 votes Thank Flag Link Fri Mar 23, 2012
Without knowing the details of your transaction - Normally a contract is written so that the house and the buyer must qualify for the terms set forth. If an appraisal comes in low, this does cause an issue. If you didn't address the appraisal in your offer before hand knowing it could be an issue, sounds like you didn't... then unless the seller comes up or you pay the difference you don't have a deal. Have your agent check with managing broker. Good luck!
0 votes Thank Flag Link Fri Mar 23, 2012
Actually we did address this at the beginning of the process, and the appraisal came in at the exact number that my agent expressed to the seller when we made our first offer. We agreed to offer 10k more at that time so that we could all be in agreement. And when the appraisal came in where we thought it would, I don't think the listing agent wanted to work with us anymore. He first told us that the seller would meet in the middle and that we would have to pay the 5k, but all of this was over the phone. Before we got to see anything in writing, or we even had to chance to agree to their terms (which we were going to), the listing agent decided that he wanted to cancel escrow. All of this happened in only two days. Btw, who would be the managing broker?
Flag Fri Mar 23, 2012
Call me for some options that U may consider that may work when an appraisal comes in higher .
I don't have your dox, so it's best to contact your buyers agent, lender and escrow officer to determine your options, if any in regard to this sellers cancelation, and ask for your buyers earnest monies deposit refund in CA. 760 622 6855 maureen@landangel.com
Web Reference: http://coastal.biz
0 votes Thank Flag Link Fri Mar 23, 2012
No they cant! Plain and simple! There MUST be an addendum agreeing to the new purchase price, and if both of you cant come to an agreement there would have to be a signed cancellation, agreeing to cancel. If I were your agent I would first have my broker contact the listing agent's broker, and if that doesnt help mediate then I would contact the DRE and file a complaint!
0 votes Thank Flag Link Fri Mar 23, 2012
I would seek legal council right away. You should also talk to your Realtor and/or their Broker. If you are passed your contingency time frame it may be possible for them to cancel if they sent you a Notice to Perform and you didn't.
Keep in mind the seller most likely agreed to sell the house at a certain price. Just because the appraisal came in low does not mean they have to reduce their price.
Good Luck!
0 votes Thank Flag Link Fri Mar 23, 2012
Yes, thank you. My realtor and I are currently trying to get a hold of a legal expert to discuss all of this.
Flag Fri Mar 23, 2012
You need to speak to a real estate attorney. Generally until the finance contingency has expired the seller can do nothing, because you can make up the appraisal difference and continue executing on the contract. They do not have to negotiate the purchase price with you.
0 votes Thank Flag Link Fri Mar 23, 2012
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