Home Buying in 85283>Question Details

Jbc620, Home Buyer in 85283

Inspection fee and appraisal fee refunded?

Asked by Jbc620, 85283 Wed Mar 23, 2011

I found a house I liked and my real estate agent, the seller, and I agreed to a $379,000 purchase price (list price was $389,000). I paid $500 for the inspection, then $500 for the appraisal. The appraisal came back as $340,000 and the seller does not want to bring the price down to that. I also cannot pay the additional $39,000 cash. So, I guess I can't get the house now? Is the $1000 I put in towards the inspection and appraisal refundable in any way or is that money just lost??? What if this happens again - every time i find a house I like and something like this happens I can expect to just lose $1000????

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Spirit Messingham’s answer
It is not refundable, unless your agent wrote language specifically about this in the purchase contract. If I was your agent, I would have written a letter to the sellers explaining that it is true they do not have to "come down to the appraisal price" you simply can't buy it because the bank will not loan the money. A house is this market is ONLY worth what the bank appraises or for period. IF they (sellers) get another offer, the next appraisal could very well come in for even LESS as the market is still declining.

But yes, that is something you should be and need to be prepared for, believe it or not, I educate my clients along the way and spell this very situation out to them, that it does not "always" happen but it can happen.
I also STRONGLY urge clients to WAIT and order the appraisal AFTER the inspection, to save that fee. There are times where the clients ask for things to be repaired on the BINSR (Buyers Inspection Report) and the sellers will not comply & they ended up walking away.

I am not blaming your agent; however they should have made you aware. Now you know for future offers.
Sincerely wish you the best of luck.
Spirit
1 vote Thank Flag Link Thu Mar 24, 2011
It's not the agents fault, that the appraisal came it short. The agent cannot go over every possible situation with a buyer. There are a number of things that can go wrong in every transaction. Every transaction is different. Your agent cannot make you aware of every pitfall, no matter how much they try.
Flag Thu Mar 5, 2015
I was told the only money I would get back was the earnest money which was 1000.
0 votes Thank Flag Link Thu Jun 25, 2015
Yes, that's normally the case when a house fails to appraise and the Buyer cannot get financing.
Flag Wed Jun 8, 2016
I was not told by realator the if home does not meet the appraisal price that the deal would be off and I would lose my appraisal and home inspection fee. I was not told that the appraisal was the last step of the sale and that if seller would not meet appraisial price this would happen. was it not the realators responsibility to inform me of this before I paid for appraisal and home inspection? I also paid 1000 earnest money which I would get refunded but the rest would be lost. What can I do about this if appraisal does not meet the buying price of the home? Thank you very much.
darlene
0 votes Thank Flag Link Thu Jun 25, 2015
Same thing happened to me and my husband on a house deal. We were very upset and displaced since we were going to close on a Friday but the seller waited until Tuesday of the closing week to inform us that she did not have the 20,000 difference between the sale price and the appraisal. so we have to live in a motel a few month because we had to be out of our rental the following Monday cause it was already leased. Anyhow. I had to blame my agent cause she did not do the comps. as the other agents stated above. And it was not included in the contract for the seller to reimburse anything. so needless to say you have to count it as a lost and learn from it. This was our first time buying and it almost made us give up..so sorry for your lost
0 votes Thank Flag Link Sat May 16, 2015
Very unfortunate the seller will not agree to reduce the price to the appraised value. Appraisal and Home Inspection fees are not refundable. They provided the service and need to get paid. Make sure next time to have your agent comp the home to make sure the value is there. You can ask the seller to pay for the appraisal and wait to complete your Home Inspection until the appraisal has been completed. It usually can be done in 3 to 4 days. This will at least save you the cost of the Home Inspection and the seller will also have money invested. If the home appraises, then you can proceed forward. Sorry it cost you a $1,000. That's a lot of money to loose.

Best of luck to you!
Deborah
0 votes Thank Flag Link Tue May 31, 2011
Did your agent check comps on similiar properties prior to writing the offer? This is a telltale sign of whether you want to go forward. Unfortunately, as a part the buyers due diligence, this is a cost that is not refundable but a part of doing business. I would proceed with caution on the next property and make sure your agent provides you with all the most current comps (no less than 3 months) and discusses them in detail with you. Good luck to you. :)
0 votes Thank Flag Link Thu Mar 24, 2011
In an effort to keep this transaction together, has your Realtor posed the question to the Lender about having a second appraisal completed? If they will allow for it, you could ask the Seller to foot that bill. Have your Realtor provide the comps as stipulated in the answers below, and make sure it is justified prior to proceeding. But appraisers have differing opinions as to value, the same as us Realtors do. So it is worth the effort to try and save the time and money that has been expensed on this transaction.

Best of Luck.
0 votes Thank Flag Link Thu Mar 24, 2011
Wow, I'm surprised the comparable homes you reviewed prior to writing the offer didn't shed more light on the pricing? You did review the recent sales in the area before writing the offer?

Unfortunately many contracts are written today and the buyer has exposure such as you are experiencing. I can't speak to the exact contract you entered into but what you state is common.

Arizona Homes for Sale by a Guy from Iowa
Web Reference: http://www.McVinua.com
0 votes Thank Flag Link Thu Mar 24, 2011
Bottom line - unfortunately, no, you can't be reimbursed for the cost of the inspection and appraisal.

Did your agent share comps with you? Did the comps justify a sale price of 379,000?
Just curious.

There is really no way around paying for these services in advance, and having any assurance this won't happen again.
Make sure your offer is in line with comparable sales.

In my area, we use attorneys to handle our closings - so the attorney might be able to include a clause stating that the seller will reimburse the buyer, for the appraisal, if the house doesn't appraise out., and if the deal falls apart as a result.....it's worth a try!
0 votes Thank Flag Link Wed Mar 23, 2011
If appraisal is questionable based on comps you could request appraisal be paid by seller.
0 votes Thank Flag Link Wed Mar 23, 2011
You hired an inspector and the job was done and the inspector deserves to be paid for the job. Same for the appraiser. So where would your refund come from? The seller is not obligated to pay you back. Both the inspection and appraisal were for your benefit and not for the seller.

Now, what is the seller going to do? If the appraisal is correct, the house is overpriced. He said he won’t come down, but who will pay his price? If the seller is motivated he needs to take a market correct price in order to get the property sold. On the other hand, if the seller is not motivated, he should take his property off the market.
0 votes Thank Flag Link Wed Mar 23, 2011
Hi, I'm not sure about you state but NY is a "buyer beware" state. Unfortunately any money spent on an inspection and an appraisal is usually lost if the deal falls apart. There is a chance that this can happen again but next time you will be a bit more cautious when it comes to making an offer.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
914.406.9023
0 votes Thank Flag Link Wed Mar 23, 2011
Yes.

It's not the fault of the homeowner that the property didn't appraise for contract value.

You can either blame the appraiser, the agent that sold you the home or yourself.

You can also be grateful that you didn't pay $379,000 for a $340,000 home.

And yes, I've seen it happen where homebuyers paid $200,000 for a $99,000 home.

Don't let it happen to you.
0 votes Thank Flag Link Wed Mar 23, 2011
I'm sorry to hear about your situation. Those are 2 costs that are paid out of closing and are not typically reimbursed by the seller. You can ask for the seller to reimburse upon a successful close, but not many sellers will pay for inspections and appraisals.
Web Reference: http://www.jameswehner.com
0 votes Thank Flag Link Wed Mar 23, 2011
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