Home Buying in New Lenox>Question Details

Lisa, Home Buyer in Home, WA

Contract signed, inspection done, repairs agreed to by sellers yet my realtor's contract has a clause

Asked by Lisa, Home, WA Mon Mar 3, 2008

allowing us to cancel the deal if the bank appraisal is less than the agreed upon price. The seller will not agree with this clause. My question is should we continue to pursue this deal or back out? We like the house, but now we feel uneasy about it.

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All of a sudden this issue is an issue? That is always in your standard contract to protect the buyer. Why would you want to purchase a home if it's not worth what you're paying? In this market, it would be silly to over-pay for a property. There are too many homes out there that are "screaming deals!"
Web Reference: http://www.idamccarthy.com
2 votes Thank Flag Link Tue Mar 4, 2008
Hi Lisa. The bank wont lend on a house that does not appraise out anyway. So you should be able to get any earnest money back if it does not appraise. Call me if you need a mortgage broker. 630-330-2229
1 vote Thank Flag Link Thu Jun 19, 2008
Ida nailed it right on the head. Why get involved in a house that won't appraise for the loan. I will bet you cancel the transaction and the seller will lower their price to the loan appraisal. There are so many houses competing for so few qualified buyers

David Cooper Las Vegas Foreclosure Investor in Bank Owned REOs with Cash Flow. not a real estate agent,
Question??? email or call +1-7024997037
0 votes Thank Flag Link Mon Apr 11, 2011
You would like to be sure that the home you are looking forward to buying is at a fair market value. It is rare that the seller is concerned about the home not appraising and wanting you to buy the home in any event. I would ask your Realtor and attorney for their advice concerning this. If you have done some studying as to the value of homes in the same area and you really love the home then maybe that would be enough positives to feel that you should move ahead. It would be important to know what the sellers situation is that leads them to not want to honor this rather normal part of a contract.
If I can be of further help please call me sincerely al walsh 708-710-4275
Web Reference: http://www.thewalshteam.net
0 votes Thank Flag Link Mon Apr 11, 2011
anyone else get the feeling we're talking to ourselves here? lisa checked out months ago...
0 votes Thank Flag Link Sun Jun 22, 2008
I would ask myself, and have my realtor ask the seller's realtor, why the seller has a problem with the clause. Is he concerned that the house won't appraise? It is in many states standard contracts. It is there to protect you. In many contracts, you still have the option to go forward with the sale if you choose to, to renegotiate the price, or to walk away from the deal. Ask your realtor which options are open to you.
0 votes Thank Flag Link Sat Jun 21, 2008

As Mike points out, if you have been pre-approved for the mortgage loan there is a Loan to Value (LTV) provision. Unless you are going FHA the cap on purchase money loans today is likely to be 90% but the program you have been approved for may be even lower.

Please let me know if I can be of some help in reviewing your situation.
0 votes Thank Flag Link Fri Jun 20, 2008
the bank will lend on it...however, their LTV will be based on their appraisal. If the contract does not have an appraisal contingency the deposit is at risk if you do not come up wit cash for the difference.

this takes us back to the issue of whether or not the contract has a clause controlling that issue. we never heard back from Lisa as to this.
0 votes Thank Flag Link Fri Jun 20, 2008
This clause is protecting you, not the seller. Underwriters are under more scrutiny today than in the past because of the sub-prime debacle. Whether you should pursue this deal depends on your lender's guidlines with respect to the appraisal value and the amount you're financing.
0 votes Thank Flag Link Fri Jun 13, 2008
it's not your realtors contract, it's yours. now we need to know how that clasue is to be a controlling term, if at all. this will depend on the style of your contract...there are three ways it might show itself...

1. If such a clause is an "initialed" clause then both parties need to do so to have it be a contract term. if that clause is not initialed by both parties you may have a faulty contract. The seller can claim that there is no appraisal contingency...to which you will reply (through your lawyer) that they should have Countered if they were opposed to that term and not let you proceed in detrimental reliance and at great expense to yourself. such a situation we can refer to as the lawyers full employment scenario.

2. if it's a boiler plate term that gets "checked" by the offeror, AND if you checked it, AND the page upon which it is checked is initialed by the parties it is binding. The seller has bound himself to that term...asuming that the contract is otherwise properly executed.

3. it's just a plain old boilerplate term...no check boxes, no spots for initials... that all sales under this contract are appraisal contingent. in which case the seller is out of luck and will be awaiting the word from you as to whether you will be buying or cancelling per the contract.

can you fill us in on how your contract treats the appraisal contingency?
0 votes Thank Flag Link Mon Mar 3, 2008
You're saying you signed the contract but the seller didn't? IMO this is something that should have been negotiated before you spent the money on an inspection. You have 2 choices: 1. tell them you insist on the clause and risk losing the house 2. agree to sign without the clause. Do you think it won't appraise? Are you taking out a mortgage and is there a mortgage contingency? If it doesn't appraise the bank may not loan you the money so you would have your "out" anyway, but you can't count on that.
0 votes Thank Flag Link Mon Mar 3, 2008
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