My question for you and your Realtor is was the previous appraisal a material fact. If it sticks to the property for 6 months I believe that it is and so should have been disclosed the second your offer came in with FHA financing addressed in that offer, was it mentioned in the offer you were going FHA? You should have your agent contact the state real estate commission and ask. You should get back your money spent since they did not tell you if they feel it was a material fact and all signs point to it being so. My guess is the seller had a new agent not familiar with FHA rules. This will force them to learn.
What you have experienced is EXACTLY why FHA backed loans are NOT COMPETITIVE.
As you correctly stated, the consequence of this failed effort will attach to the house for a very long time. The SELLER must endure the consequence of the financing choice the buyer makes. Both of those FHA backed offers should have been kicked to the curb, IMMEDIATELY!
So, how would the outcome be different if YOU WERE THE FIRST BUYER?
The outcome would have been the same. The appraisal would have come in low. You would refuse to pay the difference. Your money spent would be gone.
The best way to identify a 'fair' mess is when everyone is unhappy. You need to understand the issue is with the financing choice you made. The only issue I have with the listing agent is the failure to counsel the seller to reject FHA financed offers. Stuff happens. This time it happened to you.
When you make your next purchase offfer, make sure you know how it will appraise and position yourself accordingly. FIAT appraisals are predictable.
Are you aware a buyer CAN and often will change lenders and structure AFTER the offer is accepted.
They use a local lender prequal and switch to Qicken Loans before closing.
There is too much we do not know.
So far my biggest concern would be to decide if a previous appraisal was a material fact that needed to be disclosed to you. That, to me, would be a good question but mainly one to get you out of the deal. What value did your appraisal come in for?
I have never heard of an appraisal being good for 6 months, that part surprised me and I would be curious to hear from some lenders on that.
Did you have your Realtor do a CMA before you made your offer?
If you had, you would have seen the discrepancy between the LISTING PRICE and the Market Value; that would have been a Red Flag for you.
You assumed that the List Price was a working figure.
I would never let my Client assume anything!
You're not getting it...
It matters not that I was the 2nd buyer. I know full well the pros and cons of FHA financing. Had I been aware of the first buyer being FHA and of the low appraisal, I would have walked, so as to not repeat the scenario of the first buyer. And I COULD have, had the listing agent been forthright. But, this person chose to tell an untruth.
How is this listing agent providing good service to their clients?
The deal has not fallen through yet. I'm waiting to see how the listing agent deals with their deceit first. In my book what has been done here is unethical any way you slice it...
Uh, no I'm not looking for someone to blame, I just don't like being lied to. Would you? I'm not buying a candy bar at 7-11!
I'm FHA. Previous buyer was FHA. FHA appraisal is six thousand lower than accepted offer. FHA appraisals, as long as they are logged by the lender, stick for six months.
The point of this is, if I had known the previous buyer was FHA, then I could have kept looking for another house and saved the money I already shelled out.
I am not sure if this sort of thing HAS to be disclosed...but there indeed IS a difference between non-disclosure and an outright lie (in writing, no less).