My mother often reminded us to "play nice." This tactic is not playing nice!
Under the circumstances, you are faced with a decision. However, we wouldn't rule out renegotiating the price. The fact that the square footage was not represented accurately is misleading and down right "snakey."
Our recommendationis to revisit your comparison property sale prices based on square footage before making any decision. This should clear the path for better appreciating your options.
In my market, the basement (below grade) is not counted as square footage of the house unless it is a finished walk-out basement. But check your county tax records - actually, why isn't your agent doing that for you?
You're telling me that you're paying $535,000 + 40,000 = $575,000 for an 1,800 Square Foot house. Is this the norm for that neighborhood? That's $297/sq ft. According to what you're telling me, that's more than usual for that neighborhood. You're telling me that that house should sell for $250/sq ft X 1,800sq ft = $450,000.
$575,000 - 450,000 = $125,000 over ??? What do you think you should do?
Generally speaking, it's not usually a good idea to buy the most expensive house on the block. It is usually better to buy a house for less than the most expensive one which was recently sold in that neighborhood.
You do need to get with your agent and clarify. If your offer was accepted, and you wish to withdraw, you need to cancel according to the contract you signed. There will be a way for you to cancel. If the agent you are dealing with is representing the seller, you might want to think about getting your own agent to help you find and buy a house.
Good luck to you, Aditya.
Hind sight is always 20/20.
I do have a couple questions that could have a bearing on the answer. First, what is the sq ft listed on the county records and Preliminary Title Report?
Second, has the basement been finished out and now is considered to be living space or is it just an unfinished space?
If the county records do not include the basement space, I would certainly suggest you discuss this with your agent and then possibly renegotiate based upon the those records. Having an appraisal should help you determine what you actually have there and comps. Once you have that info. you can calculate what you should be paying. I do have to question your agents comment about the market coming back strongly in 4-5 years. Using those exact words is a pretty strong statement and any agent who tries to predict the future of a real estate market is in my estimation doing a disservice to his customers as well as risking a potential liabilty. The truth is none of us can be sure what the market holds in the future and thats why today CAR has a MCA (Market Conditions Advisory) that buyers and sellers sign explaining just that. The fact is you both need to be comfortable with what you're buying and paying and I would not reccomend making an offer based upon posibilities and what if's only on what is.
Yes we know that it had a basement. By accepted offer I meant we went to-and-fro on negotiations for 2 days and then decided a price. Pardon my ignorance of exact terms but by 'accepted offer' and 'no contract yet' I mean we and seller have fixed on a final common price. I used $22/sqft just to convert 40K worth of updates to 1800sqft of space. And these are not actually updates; we need these to make house livable. For example, currently the kitchen (including appliances) and 2 bathrooms are in a bad state and need to be replaced to even make them economy grade.
We have seen houses till $575K but didn't like any of them because of one or the other reason. This is one of the few houses we liked. Other house we liked a month ago got lost because there was another higher offer.
So we like the house and can stretch to pay $575K for it. However, thought that we'll be paying a lot more than other equivalent houses around us is pinching.
Aditya, I think you need to take a walk around the block and collect your thoughts. You say you have "no contract yet," but you also say that there's an "Accepted offer." That needs to be cleared up.
A CMA report is not an official document, by any stretch of the imagination. And these prices on updates - $22/sf? No appraiser or real estate professional speaks in these terms.
I'm not a big fan of buying fixers, from the financial side of things, but as a practical matter, the advantage to buying a fixer is that you're not paying for somebody else's taste.
At the end of the story, if you're going to feel pinched every month, then you really shouldn't buy a fixer. There's a truism in construction - it takes twice as long as planned, and costs twice as much as budgeted.
We can't advise you, because we don't know you well enough. But if the house is $535K and needs $40K for updates, that makes it a $575K house. Is there a house you'd rather buy for $575K?
All the best,
Your agent should have advised you regarding the 1200 square feet of living space below the grade. If your agent went over recent comparable sales with you before the offer was submitted then; that should have been pointed out. The public tax records would also show it.
If you truly like the home, then I suggest that you hire an appraiser and discuss his completed report with the seller to possibly renegotiate the selling price. A lender will hire one anyway if you plan on financing part of your purchase. Check your purchase agreement to see if there is a mortgage contingency on it as that also includes an appraisal.
Good luck to you!
Prudential Connecticut Realty
HIRE AN APPRAISER , TERMITE INSPECTOR, APPRAISAL Have a blessed evening