I believe the buyer stupid by trying to outsmart everybody. However they relied on the advice of a Professional and the comment about the appraisal was iresponsible. That encouraged the buyer into this reckless behavior. A prudent buyer will want to get as much leverage as possible. Its up to their Realtor to warn of the consequences, not encourage them with false statements.
As a Professional in your industry you have to be accountable for EVERYTHING that you say. It's up to the realtor and the Mortgage lender to manage their clients expectations by providing accurate information. The correct approach should have been to say that if the appraisal comes in you are stuck at that price.....but maybe you catch a break and the property appraises low.
As Paezle has pointed it, not managing expectations here here has created a huge problem.
As for putting in a complaint to the Local Board of Realtors about the Agent's conduct, I'd say this: prioritize what you as the Buyer are trying to accomplish. If your goal is to buy a home, and you are truly that upset with the accepted price, then get yourself out of this deal and move on. If you have suffered some material "harm" such as expenses incurred, you need to consider that, too.
Do you want to get into a messy dispute with the Realtor over a misplaced comment? Or do you want to buy a home?
But since the house did appraise, then the Buyer has purchased the home at market price. The other bidders were below market.
I'm curious to know just how much higher the bid is above what the Buyer "really" wanted to pay. With interest rates so low, the payment might literally be a couple of dollars more than the imagined "ideal" price in the Buyer's mind. In which case, if the Buyer is "in it to win it" and become a homeowner, this whole discussion is moot. The Buyer got the house; end of discussion. Deal Made. Deal-Making 101.
Here's how the rest of it played out:
Once the seller "won" the bid and the property appraised for the amount of the bid, the seller backed out of the deal after unsuccessfully trying to get the purchase price reduced by asking the seller for significant cosmetic changes to the home.
The buyer's agent told the seller agent that if the house wouldn't have appraised, then the buyers would have proceeded with buying the house at a lesser amount than what it had bid and that the buyers didn't feel that the house was worth what it had bid.
The sellers suffered damages by selling at a lesser amount to one of the other original bidders. In addition, they had to carry two homes because they had purchased a home after accepting the buyer's bid.
The Buyers put their shorts on one-leg-at-a-time too.
And they got the darn house for Market Value or less.
It just that not, they realize that they could have gotten the house for less, MAYBE!
and they want a fall guy!
They wanted the house,
They outbid the multiple offers,
I don't see a problem, just a lot of sour grapes!
If they hadn't gotten the house, would they blame the Agent for telling them to bid TOO LOW??!!
The Realtor has NO CLUE what we as loan officers are dealing with when it comes to appraisals. The only time the Realtor hears about an appraisal issue is when it comes in low or when repairs That being said the Realtor had no basis for such a comment. I can tell you that appraisals have become very inconsistent but the values are more consistent on purchases than refinances. Give an appraiser NO point of reference ( ie purchase price) and they are all over the map. I have challenged appraisals and had the value increase from $385k to $465k which shows to me the incoinsistency, but that does not guarantee that all appraisals will come in low.
It was a stupid comment and not representing their clients best interests. Had the Realtor said that the property MAY NOT appraise, then that would not have been so innacurate.
Cornerstone Lending Inc
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The buyer can still terminate the contract. If the escrow was already paid, they may lose that. If they cannot qualify for a mortgage at the higher amount AND the offer had a mortgage contingency, they may be able to cancel the contract and get back their escrow. It all depends on how the offer was structured, but I'm assuming that if the appraisal was done, the buyer qualified for the higher mortgage and would have already paid for any inspections, the escrow, some lender fees and the appraisal - these would typically be forfeited.
I think the error was a judgement call....the real estate agent should NOT have indicated that the property wouldn't appraise. Even if the agent were a certified appraiser and rendered an opinion of value, there are no absolutes. Two appraisers can appraise the same property with somewhat different results.
Whenever there are multiple offers, it is always a good idea to come in with your highest and best offer. If the buyer did not want to purchase for this price, the buyer shouldn't have done that. It appears that the buyer may have only wanted the property at a low price and not at the true market value.
Hope this was helpful.
Carol Cei, ePRO, Realtor
ReMax Platinum Club
Five Star Professional
ReMax Actionb Realty
215.358.1100 x1223 Office
I'm in agreement that it is not a matter of the agent's ethical behavior but rather the agent assuming the to know the appraised value. Yes, agents have a pretty good idea on what property values are based on research of comparable sales, but the agent should have made it clear to the buyers that the possibility existed for the home to appraise at the buyer's offer price since she is not an appraiser. She should have explained the risk involved more clearly. At least, the buyers know that they would not be overpaying for the home.
The buyers still may be able to back away from the purchase if they cannot qualify for financing.
Good luck to you!
Prudential Connecticut Realty
The agent, and the buyer both, had to imagine that there was a possibility that the property might appraise, and having put the bid in writing, there was a possibility that the buyer might get caught, and have to pay that amount.