Home Buying in Scottsdale>Question Details

Neversaidnev…, Home Buyer in Scottsdale, AZ

Seller wants to pull out after mutually signing and accepting an offer as the appraisal is "too low"

Asked by Neversaidnever, Scottsdale, AZ Sun Oct 25, 2009

We've had an offer accepted on a lovely house in Scottsdale - needs some work, but we love it. Was on the market for $250K for 39 days with no offers, we did the comps which came in at around $190K. No matter - the selling agent stood firm and over a month we agree on a price of $227K with a VERY specific clause, that was signed off on by both parties - clause was: We'd agree to $227, but if the appraised value was lower than that, then the appraised value would be the new purchase price. The problem is that the appraised value has come in $30K less than they thought - and now they don't want to sell us the house. We have signed offers on both sides. What is the recourse? Can a seller pull out / refuse to sign and how difficult is it to force a sale through the courts?

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11
Never,

You still need to follow the outlines in the contract.

If your Realtor is that good and someone you trust, then why are you asking questions here instead of following their advice?

All this dialogue could simply compound your problems.

The ONLY opinion that matters at this point is the one that is coming from your Realtor who is representing you AND their Broker.

Everyone else' opinion here is simply fueling the fire.

As far as the 8k tax credit, congress is actually pushing to extend that and it's the opinion of the NAR that it will be extended. If you or your husband are veterans, the bill was already signed extending the tax credit to veterans.

So, you need to stop getting 2nd hand advice here from Realtors not representing you and get advice from the Realtor who is.

Sincerely,

Stew Keene - Home Smart Realty
1 vote Thank Flag Link Mon Oct 26, 2009
Never,

Guys, Guys, Guys... Have you forgotten the stipulation in the contract that states the 3 rules of working out disputes??? come on ow, don't start sending this person to attorneys right away, you know better or should.

FIRST, read the contract. In it, it sates that in the event there is a dispute, first you must "mediate" (talk about it), if there is no solution then you must Arbitrate (a 3rd party listens to both your sides of the story and makes a decision). The arbitrators decision is the tool you need to "litigate" which is the final process of pursuing a solution.

If you have a signed agreement stating the seller will lower the price, have your broker (your broker is represented by the Realtor who wrote the offer for you) contact the Broker of the listing agent's firm and see if they can start a dialogue before you start hiring attorneys.

Try and work this out with dialogue before spending money which can be expensive and often times non-conclusive in your favor should you decide to try and collect.

Also, your Realtor should know this information as well and should be advising you "Before" you sign as to how to resolve problems. If they do not have this knowledge then you are writing blind.

Good Luck To You.

Sincerely,


Stew Keene - Home Smart Realty
Master of Real Estate Society
stewkeene@me.com
1 vote Thank Flag Link Mon Oct 26, 2009
Congradulations, just in time to invite everyone over for Turkey.

Thanks for the update

"Sadly, I think this is a case of really bad management on the part of the vendor agent and the vendor" Yes, you are correct. In my opinion the listing agent really screwed up. Your Buyers agent did a great job. I will approach my next purchase with the same clause.....If I could ever get a seller to sign that.

Thanks for sharing your experience.

Good luck in your new home.

Patrick
Web Reference: http://www.AZRE.TV
0 votes Thank Flag Link Wed Nov 25, 2009
Mr.P, Other/Just Looking in Arizona
MVP'08
Thanks everyone for the information supplied, we have now closed at the appraised price. The vendor's agent went to a considerable length to get the appraisal up, but pulling in houses that were over 4 miles away didn't really cut it. He ordered his own appraisal, which came in within $3K of the original one, so we closed for the lower of the two.

We didn't have to pull any big guns out - we just waited to see what would happen. Sadly, I think this is a case of really bad management on the part of the vendor agent and the vendor. The poor woman had an expectation set of the house, which was way beyond anything in the area.

Anyway - thanks again for the information, it was very valuable
0 votes Thank Flag Link Wed Nov 25, 2009
Neversaid never,

I've run into similiar situation before with an FHA loan - the course of action we took was to appeal the FHA appraisal and provide data that supports a higher appraisal. Since the seller and seller's agent believe the appraisal is too low - they should be able to provide lots of factual data (recent comps) that support their higher price opinion This data can be used to appeal why the home should appraise for more. The FHA appraisers are going to be looking for homes that are similar (close in proximity, close in # bedrooms/bath/features) and they also want very recent sales (within last 30 days preferred - can go back further, but they may make some adjustments for this). One of the items also to look at is the type of sale of the home - if you're buying a resale or short sale in good condition and the appraiser is comparing properties that are foreclosures and need major repair work - that could through off the values.

To me, this is fair as it gives the seller a chance to inform the appraiser why it should be valued higher and ultimately the appraiser is a 3rd party and will weigh information against their current appraised value to see what is correct and valid.; Typically, an appeal process takes about a week to do.

Best wishes that you find a solution that works for you! :) Let us know how it turns out!
0 votes Thank Flag Link Mon Oct 26, 2009
Thank you again to everyone for their input, experience and opinions when answering my question on here. Naturally, we will follow all processes, and I am grateful to those that have taken their time to tell me their experiences or thoughts.

Jay:
I read yours and everyone's posts, and assumed that everyone meant that court action was a last resort - they were, like you, just telling me a direct answer to my original question.

Stew:

I will go into more detail - of course we / I am talking to my broker (who is absolutely excellent). She has the backing of an excellent firm, and I assume a great broker. How you arrived at the conclusion that I do not trust them from a forum post on a real estate Q&A website is just silly.

Like 99% of homebuyers on here, I am here doing my own basic research to plan for the future, and indeed to get all the ducks in a row - in my case this is to evaluate how much effort it is worth making to get this house and when we just ask for our expenses back & bail.

Both myself and my agent know that the vendor's agent is not filling the vendor (who lives out of state) in on all the knowledge. The Seller's agent did not know that an FHA appraisal stuck to the property for 6 months - and as of this afternoon will be referring the appraisal to the appraisal review board.
0 votes Thank Flag Link Mon Oct 26, 2009
You have a very strong reason to consult with a real estate attorney in your area. Given the information you've provided, it appears the seller agreed pre-appraisal to adjust their price based on that result. Not being an attorney and unable to give you legal advice; my next step would be to consult with legal counsel. A word of caution: be absolutely certian the attorney you select has vast real estate experience: for example, you don't want a criminal defense attorney to represent you in a real estate matter, and vise versa.

Kim

Disclaimer - I am a licensed real estate broker in the State of Ohio
0 votes Thank Flag Link Mon Oct 26, 2009
Hey Thanks for answering.

Personally, I would not worry about the Tax Credit, it will be extended. Now that seller can`t sell to FHA, because that appraisal will stick for 6 months. The next appraisal for a Conventional loan will probably only be about 10K more. So Seller needs a cash buyer who waives the appraisal.

Myself I would not go to bat, Stick with your Buyer Broker, and their advice.

This market is not going anywhere, you`ve got time.

If you can`t get them to lower the price, at least ask for the inspection & appraisal money to be compensated.

Good Luck
Patrick
0 votes Thank Flag Link Mon Oct 26, 2009
Mr.P, Other/Just Looking in Arizona
MVP'08
Thanks for the responses - much appreciated, here are some answers to the questions:
1. We are FHA buyers.
2. We asked for the clause.
3. Stew - naturally seek amicable resolution first - but it's worth $8K in missed FHA if we don't close escrow by 31st Nov, I just want to know what the options are before we go in to bat. Our realtor is a good one, but that's what this forums for, right? Multiple opinions? ;)
4. We can't split the difference as the $15K required to split it is aside for renovations.
5. The appraiser is a thoroughly experienced one.
0 votes Thank Flag Link Mon Oct 26, 2009
Wow that is crazy.

A seller would sign a addendum that says seller will sell at an appraisers price !

Even crazier that a listing agent would allow this "Clause" to come into play especially with the new appraisal rules.

In addition you have know idea if the appraiser has done 10 or 500 appraisals or if any in that area.

This could only be crazy insane if you are an FHA buyer. Please let me know..I gotta know.

I must say you have a pretty savvy Buyer Broker.

Yes an Attorney should be consulted. Yes I would love to read this contract.

"how difficult is it to force a sale through the courts?"...Like finding water in the desert.
I don`t think you will win anything, because it is an appraisers opinion, and the appraiser may have had a few Martinis for lunch.

I think the best course is trying to split the difference, you thought it was worth 227K...112K can`t be that bad, do you think 197K is a total steal.

Finally take a good long look at that appraisal...mistakes happen.

Keep us posted

Patrick
0 votes Thank Flag Link Mon Oct 26, 2009
Mr.P, Other/Just Looking in Arizona
MVP'08
Not going to happen. An attorney can better advise you on this, but one recourse might be to sue for damages - you'd probably have to prove that you were, in fact, damaged.
But you will never, ever, ever, ever - find a judge that will force the seller to turn the deed over to you. Ain't gonna happen.
0 votes Thank Flag Link Sun Oct 25, 2009
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