This is why I say day in and day out you have to use an attorney who does Short Sale Closings, not just an attorney who does closings on Tuesdays and then wills on Thursdays... Ok I am off my soap box.

As to your problem. Read your contract or have your attorney goes over the contract with you and hope that your attorney has put some verbiage in the contract for such a problem. The seller can always bring a suit. If they are successful or not is dependant on many things, however the advice below is correct. The contract is very important. Before making a rash decision sit and look at all of your options.

KB Collins
New York City
Attorney / Broker
Keller Williams.

Depends on your contract and you should press your attorney for a clear answer, after all you are paying him for his services. Did you us a Realtor and if so what are their thoughts. Good Luck.

Anna
917-576-5376
abrocco@laffey.com

The short of it is it depends on what type of real estate contract you signed when you purchased the house. Many real estate contracts have financial contingencies which mean that you have the financial means to buy and that you will be able to obtain a mortgage for the purchase of the home. These mortgage dollars, when added to your down payment and escrow monies, will allow you to have enough monies to complete the purchase. If the appraised value is less, then the amount of mortgage dollars that you have available from the bank should now reduced. Therefore, you will have to add more down payment dollars to complete the purchase if the purchase price remains the same. Depending on your financial situation, you may not have the additional monies to add and therefore, based on the financial contingencies, your real estate contract may be voided. Obviously, you need to talk to a lawyer since you are dealing with contract law and subject to state laws and any “breach of contract” penalties that may be incurred.
Also, I have seen sellers that when presented with the exact situation end up taking less monies to keep the deal intact. However, that is on a case to case basis and depends on the differential in prices and the particular motivation of the seller
Also is the attorney, YOUR attorney, or an attorney hired by the bank to guide the real estate transaction through to closing? As I said earlier, you need your own legal guidance on this matter.

There was no an appraisal contingency in the agreement and I put 8k down so I definitely don't want to lose my deposit. However, my bank will not give me a loan because the appraisal was so low. I though this would automatically negate the contract since it was writen with those particular numbers.