What you need to do is FULLY EXPLAIN to the seller that the FHA Amendatory Clause only states that if the home does not appraise for enough then YOU (the buyer) are NOT obligated by the sales contract to purchase the house. It does not say that The SELLER HAS to lower the price! FHA goes on to state that if you do choose to purchase the home at a higher price than the appraised amount then the FHA will only give you a loan based upon the appraised value. It is up to you to come up with the rest of the money.
As has been stated by others in this blog, if you have a signed contract then the seller cannot back out of the contract until the contract has expired. However, you must buy the house at the contract price not the appraised value if the seller is unwilling to lower his asking price.
The best way to clear up the discrepancy once and for all is to simply have an appraisal done ( you are going to have to pay for one anyway if you are trying to buy the house) and then you can negotiate with the seller from a standpoint of what the house DOES appraise for.
As a full service broker I do FHA loans so if you would like more advice about how to purchase this house please call me: 239-208-4500.
Faith Home Loans
800-801-6080 (outside of FL)
From my experience, and I'm sure most will concur, unless otherwise stated, you can get whatever financing you want and he/she cannot renig on the contract. I would still ask your real estate agent directly on this. If he or she doesn't know, then get them to ask the broker in charge of their office. I look at this and say that no mater what route of financing you take, it makes no difference if the appraised value is less and he /she adjusts according to the new value. Something else is going on here. A lot of sellers shy away from FHA loans only becasue they think they take longer. I can do an FHA loan faster than a conventional loan now, so that is no longer a valid reason not to allow for FHA financing. If the seller doesn't accept FHA loans, it would have been clearly written up in the contract at time of execution, and they seller would be limiting himself/herself to a much smaller percentage of buyers, which in this market is moronic. Call or email me if you need someone to get the FHA loan done in 2.5 weeks.
Co-Owner / Licensed Mortgage Consultant
Primary Mortgage Group
What does your agent say. I agree with the rest about reviewing the contract. Here it is exposed on the contract how the financing is going to accure. Without all contract info, it is hard to say but instead of going in for a fight, try having your realtor negotiate. The FHA appraisal have been mostly fair here. Explain that FHA appraisal will only follow the house for future FHA loan offers. So if it does not come in where they expected than they just don't take an FHA in the future. Tell them let the appraisal come through and then you can discuss.
What does your Realtor say about you offer compared to recently sold homes? Everyone may be jumping the gun and all might work out okay.
First and foremost, you are asking a LEGAL question that for you to make a fully informed decision about you should be discussing with a Real Estate attorney in Florida. If you have a buyers agent, they should be able to refer you to a lawyer that might give you an overview of your options and the possible outcomes.
That being said, by virtue of being in the business and understanding the logic behind things, it is usually communication or lack of communication and information that parties have that make them make the decisions they make. The issue the seller is having with the FHA appraisal and the fear is that the appraisal will stay with the house for any future FHA loans for 6 months. If it comes in low it virtually eliminates all FHa buyers, but then you have the issue that even conventional loans that are being sold need to meet many of the same guidelines as government backed loans if they are going to be sold on the aftermarket. At some point an appraisal is going to need to be done for the seller to sell his home. Any appraisal can come in low in our current market. If all parties feel the appraisal is low for the actual market, it can be reviewed and contested with solid documentation if all parties are willing to work through the process.
Ideally your purchase agreement should have indicated the type of fiancning prior to the seller accepting the offer. If not, while I am not a lawyer, it does potentially "change" the terms of the agreement and any time there is a change in the terms all parties must agree.
Also, in general terms, it is very difficult to force a seller to sell their home or to force an unwilling buyer to purchase. Yes, these are contracts and in consulting an attorney you will learn your options, but it will most likely come down to how badly you want the house to go through the time and expense of a lawsuit not knowing the outcome.....which could just be monetary damages???? Again consult an attorney, but look at the big picture and have some GOOD COMMUNICATION with your agent who will hopefully have GOOD COMMUNICATION with the sellers agent who will then have GOOD COMMUNICATION with the seller.
Any real estate transaction is fraught with high emotions as this os often the largest financial decision both buyers and sellers make at any given time. It is even a greater stress in our current market where many selers are losing equity which often equates to retirement funds.
Good luck! and COMMUNICATE!
How is your contract written? On the first page, in the mortgage section, does it say FHA financing? Did they sign the contract in agreement with this in the contract? Do you want the house? Would you qualify for a non FHA loan? Consider these questions, talk to your realtor and/or their broker AND your lender and see if you can and want to move forward. Also, be aware that often appraisals come in lower than the contract price, you can renegotiate at this point if both parties still want to move forward. A low appraisal creates an issue for the seller. His asking price will need to be changed to the appraisal amount. If a property does not appraise, it can't sell at that price regardless of the type of financing.
Coldwell Banker Residential
Is this a regular sale or a short sale that is contingent on the lienholder(s) approval?
If it's a regular sale go get an attorney asap and/or ask your Realtor for her advise and/or her broker for advice. Your Florida Realtor (hopefully you didn't deal directly with the Seller without any representation) also has access to attorneys for free legal advice if she's not clear about the Seller's ability to modify the terms of your contract.
If the Seller has already signed the FHA addendum (should have been a part of your original contract) then it would prove that they are aware of your intention to get FHA financing. FHA appraisals are not necessarily coming in lower. I recently had an FHA buyer get a house because the previous buyer's Convention Loan appraisal came in too low! Your Realtor should communicate this to the Seller's Realtor.
You need to take that issue to an attorney or your agents legal connection.
Scott Riddle, P.A.
Realtor Certified Short Sale Professional
Sand Castle Realty Group | 2220 Venetian Ct ste 2 |Naples, FL 34109
Cell: (239) 289-1849
e-Fax: (239) 390-0027
Web: http://www.NaplesRealestateTeam.com & http://www.NaplesRealtorPros.com & http://www.NaplesRealEstatePros.com