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I paid a mortgage broker a 300.00 appraisal fee up front. He can't get me a satisfactory loan.

Asked by , Wed Jul 25, 2007

I was supposed to close on a property on July 31. There has been no appraisal done as of yet. Can I get get out of the contract without losing my earnest money? I live in Georgia.

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The most common contingency in your sales agreement is your ability to get a loan. You state that you will seek a loan within a certain number of days from the date of your agreement. Did you do this? If yes, then good for you so far. Next, you probably stated that the loan was to be for a certain percentage of the sales price. Is the loan you are applying for in accordance with that percentage? If yes, then it would appear that you are in compliance with your terms of the agreement. If you are not able to obtain the required loanm then you can ask to be unconditionally removed from your agreement based upon the financing contingency clause and your ernest money returned to you. If your funds are not returned, then you can take the matter up with the local Realtor board. (I'm assuming you are using a Realtor).

First, as Realtor, it would be extreemly rare for me to advise my seller to accept an offer from someone without a pre-approval letter from a reputable lender. Further, I don't allow my buyer agents to show more than a house or two to a person until we are able to get them pre-approved for a loan. Not only do you tie your money up, but the seller loses precious marketing time taking the home off the market to deal with someone who hasn't demonstrated the ability to actually pay for the purchase. My goal as a Realtor is to make a win win for everyone and we all walk away from the closing table delighted.

As far as the appraisal fee is concerned, you should be able to get that back from the mortgage broker as they have not ordered or had the appraisal service performed.

Good luck to you. If you need further assistance, I might be able to put you in touch with a local Keller Williams agent like myself in GA.
1 vote Thank Flag Link Wed Jul 25, 2007
Good afternoon:
In your question you state that your lender is unable to get you a "satisfactory" loan. I suppose the question I have is how long have you known that a "satisfactory" loan wasn't available to you? You are bound by specific time-frames within the sales agreement, if those dates have past, you probably have little chance of recovering your earnest money. In regard to your appraisal fee. It's not unusual for the lender to collect these fees up-front since once they order the appraisal, they are required to pay the appraiser whether the loan closes or not. The appraiser did their job and expect payment. If the lender hasn't ordered the appraisal yet, nobody is out any money, and the lender should refund this fee.

For future reference . . . Anytime you get within two weeks of the proposed closing date and an appraisal hasn't been ordered by then. This should be a red-flag that there something going wrong. I would be contacting the lender to see what problems are surfacing with your loan that they aren't comfortable in having this necessary step completed. Hope you have a good Realtor representing your interest, Best of luck - Steve
2 votes Thank Flag Link Wed Jul 25, 2007
good morning, your question has a lot of "it depends" answers. If you have a concern about your earnest money and getting it back I would highly recommend you immediately consult with a real estate attorney that you trust. Do not use the attorney for the closing or one that is already involved in the transaction (unless it is already your own attorney involved). Your contingency dates will be important on your paperwork. Make sure you have all documents related to the transaction including anything and everything that you have signed in conjunction with the transaction to show to your attorney. If you have written down a log or you can remember the order of events as they happened then that would be valuable also to help your attorney. He/she would be helped by knowing what happened and when it happened as well as who said what. If you haven't kept this log yet I would recommend you start now-- jotting down the day, time and person you talked to and what the discussion entailed. You can also send them "confirmation emails" which recap the conversation you just had with anyone. This will be part of your "log" or running record of who told you which information.

Good luck and my best wishes. Truly, John Allaire
2 votes Thank Flag Link Wed Jul 25, 2007
I am concerned about the "appraisal" fee you paid. Typically the appraisal fee is paid to the appraiser at the closing table - although this isn't true in all cases.

Could this fee be for something other than the appraisal? Like a loan ap. fee?

Insofar, as the earnest money is concerned; that can be dicey.

Once you sign a contract you are held to the terms therein. There is a special stipulation that states you can get out of the contract if your financing doesn't come through - but it is only good under special situations - in some instances just not qualifying isn't enough.

There was a recent case where the seller sued for specific performance; even though the buyer couldn't afford the home - the seller was awarded the earnest money. This is mainly due to the fact that during the time you had the property under contract other potential buyers were lost.

This really is a haphazard way of telling you that you can probably get out of the contract but you are at the mercy of the seller where the earnest money is concerned.

Moral of the Story: Get prequalified before you put a house under contract. It will save you this type of grief in the future - and keep your funds in your bank
2 votes Thank Flag Link Wed Jul 25, 2007
This is more common than most people think. Usually with an out of state lender, new construction or a small company. You should have no problem getting the appraisal fee back. If you are on good terms with the loan person you might simply ask him.

If this is New Construction, all bets are off, please call the builder immediately to arrange alternative financing. They use their own contracts most of the time so any advice would be very limited. If it's a resale then read on...

In terms of the earnest money, it's likely that you'd be past all your contingencies to keep it (although you should check with your agent), in which case you should switch loan persons. A good one will get you to the table on time but it will be very difficult (especially without the appraisal done). Standard Georgia contracts come with a unilateral extension right of 7 days. Assuming you haven't used it already, you could extend the closing by 7 days without penalty.

Your best bet, is to consult with your Realtor to find out what your options are. Communication is key, even if the loan person you mentioned here is their recommended person.

"Satisfactory" is not a term in the contract. Please review the contract, there are "ceiling" terms in the contract. Meaning, if you used a standard Georgia form, then you'll have the terms of your supposed loan spelled out. You should check immediately to see if you still have any financial contingency period left on your contract.

Something else to consider is who you were talking with, what is your financial situation, what loan would be satisfactory? In my experience, 8 loan officers will give you 8 different options, but most reputable companies will be close to one another with their quotes. You should always shop 3 and see which one would be best. You can have them check your credit up to 5 times without penalty.
Web Reference: http://www.jrjarvis.com
1 vote Thank Flag Link Thu Jul 26, 2007
Joshua Jarvis, Real Estate Pro in Duluth, GA
MVP'08
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I think it depends on what is satisfactory? Can he get you a loan, just one that you don;t like, or can he not get a loan at all? If you want to change lenders you possibly could and ask for your $300 back especially if the appraisal has not been done or ordered. Switching lenders and trying to close by July 31 would be tricky, but with some lenders possible. Everything would have to work perfectly for this to happen. You might also let your agent know and see if there is a way to delay the closing while you change lenders. Do you still want the house, but loan is an issue, or is it that you don't want the house and therefore trying to use the financing as an out? We probably need more information to make give you a more detailed answer.
1 vote Thank Flag Link Wed Jul 25, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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Unfortunately there is not a black or white answer here as there are so many variables to consider. There are contingency clauses in your contract that allow you an earnest money refund under certain circumstances. Check the financing contingency time frame. If you did not qualify for the loan, and you are still within your timeline, you may be able to get your earnest money back. I would suggest contacting a real estate attorney or check with your personal Realtor. Good luck, Tary Drouault
1 vote Thank Flag Link Wed Jul 25, 2007
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