Home Buying in Naples>Question Details

Copinflorida, Home Buyer in Florida State, FL

I am in a fully executed contract in Florida. The seller has now changed his mind and decided that he is not accepting FHA loans due to possible low

Asked by Copinflorida, Florida State, FL Fri Mar 12, 2010

appraisal values. I think this is because he agreed to reduce the selling price if the appriasals come in below the agreed price. My question is can he do that?? It was never stated in the original agreement and only became to light once he knew the type of loan I was getting.

A.M. in florida

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16
Hi Cop,

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.

Take care,

Elena Ollick
Amerivest Realty
Faith Home Loans
800-801-6080 (outside of FL)
239-206-4500

eo@oceanhomesrealty.com
skype: napleshomes
2 votes Thank Flag Link Fri Mar 12, 2010
AM,
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.

Ryan McPartland
Co-Owner / Licensed Mortgage Consultant
Primary Mortgage Group
239-206-4439 Direct
ryan@primarymortgagegroup.com
2 votes Thank Flag Link Fri Mar 12, 2010
If the seller knew you were getting an FHA loan and that was disclosed in writing and he is now looking to change his mind about selling you his property, I don't see how the seller could do that without your written concent.
Web Reference: http://www.golftobeach.com
1 vote Thank Flag Link Wed Aug 18, 2010
Scott's answer is correct...This is a legal question.
Margo Rizzardini,
Coldwell Banker
1 vote Thank Flag Link Fri Mar 12, 2010
Sorry you are going through this. Andrew and Elena gave you the best answer, if negotiating like they suggest does not work then get an attorney. Your agent's office should have on that they work with.
Web Reference: http://www.soreal.biz
0 votes Thank Flag Link Mon Mar 15, 2010
Dear Copinflorida,

You really need to take the contract to a good real estate attorney.
Maybe it would be better to walk on this deal....it can get pretty messy.
0 votes Thank Flag Link Sun Mar 14, 2010
Copinflorida
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.

Good Luck!!!
Web Reference: http://www.di4homes.com
0 votes Thank Flag Link Sun Mar 14, 2010
You started with the most important point. You have a fully executed contract. Have you read every word of it? What does is say? Was there any limitation on the type of financing that you could use? If no, then who cares what the seller thinks now. Last time I checked we were a nation of laws. A contract is a contract. If the seller didn't exclude FHA financing, then too bad for the seller. They should not have signed the contract. Get a lawyer and put the seller squarely on the hot seat.
0 votes Thank Flag Link Sun Mar 14, 2010
AM
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!
0 votes Thank Flag Link Sun Mar 14, 2010
You need to tak a copy of this agreement to an attorney to determine if their is a breach. Agents cannot give legal advice, however, even if the seller is backing out, there is no much upside for you to get in a legal batlle. Make sure you obtain a proper termination to protect yourself.
Web Reference: http://www.johnkrol.net
0 votes Thank Flag Link Fri Mar 12, 2010
I can't blame the seller. Once you get a FHA appraisal it sticks with the house for several months. He realizes that someone having a FHA loan could hurt him now and for the next several buyers. That is life, not fair to either party is it?
0 votes Thank Flag Link Fri Mar 12, 2010
Coop in florida,

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.

Debbie Albert
Coldwell Banker Residential
0 votes Thank Flag Link Fri Mar 12, 2010
Hey Cop,

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.

Good luck!
0 votes Thank Flag Link Fri Mar 12, 2010
What is your agent suggesting at this point--review your contract, and if signed by all parties with deposit money, the seller can't simply change his/her mind at this point--consult with any attorney specializing in real estate for all your legal options.
0 votes Thank Flag Link Fri Mar 12, 2010
AM,

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
E-Mail: ScottRiddle239@gmail.com
Cell: (239) 289-1849
e-Fax: (239) 390-0027
Web: http://www.NaplesRealestateTeam.com & http://www.NaplesRealtorPros.com & http://www.NaplesRealEstatePros.com
0 votes Thank Flag Link Fri Mar 12, 2010
If you have a signed agreement by all parties than it is enforceable and he can not just change his mind, if the offer is not completely signed and initialled, verbal offers are not binding. you should review this with your buyers agent and if you do not have a buyers agent you shoudl contact an attorney for your rights under specific performance and any other rights of contract law. good luck working things out
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Fri Mar 12, 2010
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