Home Buying in 27834>Question Details

Web, Home Buyer in Greenville, NC

I was in the process of buying a home and had to cancel the contract due to seller disputing appraisal and too many closing dates.

Asked by Web, Greenville, NC Mon Sep 20, 2010

I started the process in June and by the end of August, was still not in the home. Paid $500 earnest money and $420 for appraisal. I was doing an FHA loan to get the home. We had five closing dates and finally at the last closing, I found out that the appraiser appraised the home for $65000 and the seller was asking $89900. He was agreeing to pay all closing costs because I bidded his asking price. He decided to dispute the appraisal which took a few weeks longer and so the realtor told me to start looking at other homes just in case. Well, I did and I found another home which I am in the process of purchasing now. The realtor with the first home is telling me that I have to pay the seller $620 for fees in which he paid out to have the house inspected and etc. It is because of the fact that we didn't set another closing date that I backed out. Should I be responsible for those fees?

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Thanks to everyone for your opinions on this matter, this experience has really opened my eyes. I really loved the first home but too many problems from the start, on top of the fact that the seller tried to talk me into using a mortgage company of his choice, which should have been a red flag right there. Even the realtor kept suggesting that I use certain lenders. I still chose the mortgage lender that I wanted to use and he just wasn't going to change my mind on that. Anyway, this home that I'm in the process of purchasing is wonderful and we should be closing on it within a week. I've accomplished so much in a months time with this home than I ever did with the first one I tried to purchase. Three months of paperwork, this and that and I still didn't get the house!!!!! Again, thanks so much........
1 vote Thank Flag Link Tue Sep 21, 2010
Based on what you have said here, on my experience, and without looking at your paperwork I am pretty certain that you should be able to get your earnest money back. If you opted for the FHA loan condition in your contract, and the home did not meet the FHA guidelines regarding the appraisal, then FHA will not loan you the money, which keeps you from getting a FHA loan on this home. My understanding of the contract states that if you have been acting in good faith in getting your loan conditions met (including the appraisal) and you are unable to obtain the loan stated in the loan condition on the contract, then you should get your earnest money back.

Unless agreed to otherwise in the contract, you (the buyer) are responsible for the inspections. Your Realtor ordered these inspections for you, not the seller. Based on what you said about making the choice of which Home Inspector to use, you gave the Realtor authority to order the inspection. If the inspection was $620 (which sounds like double what an inspection typically costs) and your Realtor has an invoice for it (which you should demand a copy of), then you are responsible. Your earnest money should not be witheld to pay for the inspection, because the seller should not have ever been or tied to the inspection charge. This is not the Realtor's money to use either. It is not up to the Realtor to withhold the earnest money. This dispute is between you and the seller. Get your Realtor's Broker In Charge involved if you need to.

Please keep in mind, I am not a Real Estate Attorney. What I have written is my opinion, but I would encourage you to get an attorney's opinion if this becomes a bigger issue. I hope this has helped answer some of your questions. It is unfortunate that this transaction did not work out for you, especially since you are so investeed in it. I hope that you will be able to close on your new home soon. If you have any other questions, or need some clarity, please don't hesitate to ask.
Web Reference: http://www.BenjiTaylor.com
1 vote Thank Flag Link Tue Sep 21, 2010
Scott, you and I are going to have to agree to disagree. If you are using a competent real estate agent that is solely representing YOUR interest, you should not have to bring an attorney into the equation until the closing. I may have misunderstood you because I would ALWAYS use a real estate atty to close.
0 votes Thank Flag Link Wed Sep 22, 2010
Glad your story has a happy ending. I have used several agents here in Greenville too and you have to keep your eyes open and look out for YOUR best interests.
0 votes Thank Flag Link Wed Sep 22, 2010
@FSBO, I don't agree with you. I've seen way too many deals go sour because buyers and sellers refuse to use a real estate attorney to the tune of $500/1000. I've bought many homes in my life and wouldn't even consider not using one today with all of the litigation, fraud and legal ramifications that go on in the business.

Penny wise and pound foolish, famous last words. Better that Web knows now to use an attorney for his closings. At $65K, this was a practice run.

Scott Miller, Realty Associates, Boca Raton, FL
0 votes Thank Flag Link Tue Sep 21, 2010
Scott, an attorney would not have needed to be involved in this process up to this point where Web finds himself/herself.
0 votes Thank Flag Link Tue Sep 21, 2010
Sorry this has happened to you, Web! But this is also an example of why not to use the same agent that is representing the other party (dual agent). This realtor is obviously not acting in your best interest. Best wishes on a successful outcome.
0 votes Thank Flag Link Tue Sep 21, 2010
In response to Benji, the realtor was a dual agent and he showed me a list of inspectors that they use for me to choose from. I haven't received my earnest money because now that I chose not to buy the home, he wants me to pay $620 to the seller for the costs of the inspections. I had already paid for the appraiser myself which was $420. The bank was going to pay the $65000 in which the home was appraised for but the seller disputed it because it was about $25000 less than what he was asking. I signed an amendatory clause in which it states that I shall not be obligated to complete purchase of property or incur any penalty for forfeiture of earnest money if the appraised value of the property is less than the asking price. I have the privilege of proceeding without regard to the appraised value if I so choose. After 5 closing dates and practically homeless because we sold our home and had to move out because the new owners were ready to move in....the realtor told me to look for other homes just in case and we did and found one. We're dealing with a modular dealership and should close in a couple of weeks. Am I responsible for the fees that the realtor is trying to get me to pay? It's not my fault that we didn't close on any of the dates that were made. I have not seen any paperwork or receipts of these services being done other than the appraisal that I paid for.
0 votes Thank Flag Link Mon Sep 20, 2010
I have a few more questions to ask before I can tell you my opinion, however, please keep in mind that I am not an attorney. If you need information on an attorney to contact here in town ask your current REALTOR.

1: Was your realtor on the first transaction working for both you and the seller? A dual agent?
2: Did the seller order the home inspection and choose which inspector to use?
3: Is your realtor with the first home the same as the realtor with the second home?
4: Have you received your earnest money deposit back yet?
5: Have you signed a Termination Agreement with return of Earnest Money?
6. Was the seller willing to drop the sales price to $65,000 to make the deal close?

Not meaning to interrogate you, but these are a few necessary questions that need to be answered in order to give you the right advice. Thanks!
Web Reference: http://www.BenjiTaylor.com
0 votes Thank Flag Link Mon Sep 20, 2010
Hi Web. It seems as though you did whatever you could to be honest and ethical in this transaction. There's only one small problem that I can see. I don't read anywhere that you used an attorney to represent you in the purchase. Why not? They cost under $1000 and would have saved you hours of heartache and lost sleep.

GET AN ATTORNEY to represent you on your next transaction.

GOOD LUCK!

Scott Miller, Realty Associates, Boca Raton, FL
0 votes Thank Flag Link Mon Sep 20, 2010
How on earth were you getting a mortgage when the house underappraised by so much? Didn't your contract have a mortgage contingency? If it did you should get your earnest money back. Your mortgage commitment should have stated dependent on the house appraising for $Xs.
Unless the contract said you have to reimburse the seller for a house inspection, you do not owe anything. If the seller paid for the house inspection, that can be reused fro another buyer.
0 votes Thank Flag Link Mon Sep 20, 2010
Unfortunately, more than likely you may be responsible. The way most contracts are written, inspections and the associated costs are the responsibility of the buyer. Quite often, as probably happened in your case, an offer can be negotiated where the seller agrees to pay for the buyer's closing costs, but that typically occurs on the HUD 1 at closing.

With that being said, however, usually the party ordering the inspections is who the vendor looks to for payment. I might add it's unusual that the seller would order the inspections on your behalf. In typical transactions, the buyer selects what inspections they want and who they want to do the inspecting. They, or their agent, then orders the inspections...not the seller. I'm a little confused with your scenario where the seller has paid for inspections in advance of closing unless he did order the inspections.

On another note...if he selected the inspectors that could be a conflict of interest where you're concerned.

Best of luck at any rate.
0 votes Thank Flag Link Mon Sep 20, 2010
Web,

It really all depends on how the contract was spelled out. The subcontractors who performed the home inspection, or other services will have to be paid regardles. They've done their job, and it's typically the buyers responsibility for those fees, and sometimes they are covered with seller paid closing costs at the table. Normally, these contractors have a form that is signed the day that they perform this work. Who signed these consent forms?

Have an attorney look at your contract. It may be that because your agent representing you signed these forms that it has to be worked out between you and your agent. The seller was offering closing costs IF the deal closed. He wasn't offering to specifically pay for home inspection, etc. But if he's already paid for them, and you never signed an agreement to have the home inspection done, or signed an agreement with him stating that you would pay for them, in my knowledge, unless it's in writing, there's no way that they can come after you.

In this day and age, we as agents see deals unfortunately that just do not make it to the closing table, for one reason or another. The potential buyers in those cases that have had work done, such as inspections, are responsible normally for those costs. It's usually scheduled by yourself or your agent, and most of our inspectors here will coordinate that with the home buyer as well as the agent.

Did you have a role in these services being performed i.e. Did you know they were taking place, were you there, etc? And have they already been paid for, or were they waiting for them to come out at closing table? If they were already paid for ahead of time, I don't think there's any way that they can come after you, unless it's specifically stated differently in the contract. If they were waiting on these services to be paid for at the closing table, then it will probably fall on you to pay these professionals for their work.
Web Reference: http://www.sandhillsnc.com
0 votes Thank Flag Link Mon Sep 20, 2010
You really should check in with an attorney to find out the full extent of your liability exposure. They will want to see your contract w/any extension dates, line of communication that you may have had with anyone involved, etc. You never said if the house did finally appraise for the full contract price or any other price that may have later been negotiated out. You may not have a valid/binding contract if those things didn't fall into place...check w/an attorney.
0 votes Thank Flag Link Mon Sep 20, 2010
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