Home Buying in 46106>Question Details

Hlrodriguez, Home Buyer in 46106

I have just had a home built and the appraisal came in low. We have placed $8000 in earnest money. Will we get this back if we walk away?

Asked by Hlrodriguez, 46106 Tue Aug 16, 2011

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On the purchase agreement there should be a statement that says the property must appraise for the purchase price, and if it does not appraise for the purchase price then there needs to be a renegotiation. If that clause is not written in there, and the builder is not going to renegotiate the price, you will have to lose the EM or pay the difference. Did you have a real estate broker represent you when you made your purchase agreement? 317-439-8583
0 votes Thank Flag Link Fri Mar 28, 2014
I am assuming that you contracted to have a home built for a sum you both agreed on. Did you give the earnest money to the builder (something most Realtors tell you to avoid) or did an agent get it? The agent has rules they must obey, while a builder will likely put the money into the operating account and so it is much harder to get back.

The lender will not lend more than what the appraisal came in at, so someone has to make up the difference somehow. The easiest way is for Mr Builder to reduce the sales price to the amount of the appraisal. Another option is for you both to eat some and split it or come up with a price agreeable to you both. The builder could drop some and you could pay more down.

I just hope you did not give the builder the $8000.
0 votes Thank Flag Link Tue Aug 16, 2011
Hi Hlrodriguez,

Read your purchase contract. In CA, our contracts have an appraisal contingency. If the property doesn't appraise and the contingency has not been removed in writing, the buyer can cancel contract without being in breach of contract - and they will get their ernest money deposit back. However, I'm not sure of the laws in your area so you may want to consult an attorney.

Good luck.

Shanna Rogers
SR Realty
http://www.ReatlyBySR.com
0 votes Thank Flag Link Tue Aug 16, 2011
This is a tricky question. I would talk to the builder about it. If you don't get the result you want, I would talk to an attorney.
0 votes Thank Flag Link Tue Aug 16, 2011
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