Can I get out of a contract to purchase a home that was misrepresented?

Asked by Russ, Belle Haven, VA Sat Sep 15, 2012

I'm less than a week from closing date on a house that I feel was misrepresented by the seller. When I review the contract it does not mention the square footage of the home (which is the source of the conflict). The contract also says I am liable for the realtors commission if I default. It was advertised as being 2704 sq.ft., but it appraised as 2204 sq.ft. The difference is due to the inclusion of unfinished, unheated space above the garage accessable only from the garage. I'm told by my realtor that the listing did not indicate that the square footage was finished and that it is common practice to use the notoriously inaccurate tax assessment for the purpose of stating the square footage of a home. The listing agent was aware that an appraisal had been recently done prior to listing the home, but I do not know if she reviewed the appraisal.

Thank you for your responses in advance,

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Answers

14
Judi Monday,…, Agent, Green Valley, AZ
Sat Sep 15, 2012
Find a good real estate attorney in your area and let them guide you through your options. I do know that in AZ our contract states that square footage is one of the items that you should verify during your inspection period which I'm sure has come and gone for you given you are so near to closing the deal. Call an attorney ASAP.
2 votes
Donald Mituz…, Agent, Chappaqua, NY
Sat Sep 15, 2012
This is a common problem throughout the country. Where I sell homes there are two neighboring MLS systems that cover the same area. In one MLS the agents tend to put the entire square footage of a house including unfinished basement area. In the other MLS the agents only tend to put finished, heated living space. When i encounter a discrepency in the listed and actual square footage I bring it to the attention of the buyer I am working with. If you've been a Realtor for a while it's usually easy to spot.

As for your situation, contracts usually do not mention the sq ft of a home. What surprises me is that your contract says you are liable for the brokers commission if you default. Did you have your own agent representing you for this purchase? If you went through the listing agent and she misrepresented the property you may have some legal recourse. One of the big questions I have is where did the appraisal come out compared to your purchase price? If the appraised value came out at or above your purchase price it may have some limitation on any damages you may be able to collect. If your contract has a mortgage contingency and you have trouble getting a mortgage as a result of the appraisal then you should be able to walk away free and clear. Talk with your attorney asap and let them know your thoughts.

Good luck.
Don Mituzas
Licensed Associate Broker
2008 Realtor of the Year
Prudential Douglas Elliman
2 votes
Thank you for all of the replies. I'll try to answer some of your questions.

The Appraisal listed a value for the house just $2,000 above the contract price with a note in the appraisal indicating that homes in this market often will sell below the appraised value due to market conditions.

I had only one day to look at houses, so we looked at about 10 houses in 8 hours or so. We really only spent 15 to 25 minutes in each house and I thought there was a fourth bedroom in this one. The appraiser says there are 3 bedrooms, but the agent that is representing me says the office qualifies as a fourth (I don't know if there is a closet). We made our decision to purchase based upon the statistics provided as much as we did the visit to the house. Had we known the dimensions of the house, we would likely have purchased a house in a nicer neighborhood that listed for $50,000 less.

I may seek legal advice, but my attorney had to recuse himself due to his contact with the seller.
Flag Sat Sep 15, 2012
Vivianne Rut…, , Fairfax County, VA
Sun Sep 16, 2012
Russ,
The fact that you had only 8 hours to select a house does NOT count here. One day is not always sufficient for home shopping.

You submitted an Offer on this home because apparently YOU saw the most VALUE as compared to other homes that you previewed that day - again, the fact that you were able to devote only one day to previewing homes is completely irrelevant to the seller....

The seller ratified the contract in GOOD FAITH that you are "ready, willing and able" to close the sale. Perhaps the seller declined offers from other buyers to accept yours. Perhaps the seller already made personal decisions based on your offer, packed his belongings and is ready to move out ....

I am NOT suggesting here that even at this point in the transaction you do not have the right to make a decision that is BEST for YOU as a BUYER, because you do have this right - IF you have any contingencies open, you can do it legally without losing your EMD.

I am only stating the fact that in real estate transaction your decision affects many other people and you do owe at least a business courtesy to the Seller.

I suggest that IF you have no contingencies open and you want to void this contract, you should contact your lawyer first to review the contract and find out your options.
1 vote
Well written response. Thank you. All that you say is correct. I still feel I've been duped and I believe the realtors should have been able to differentiate a 2204 sq. ft. house from a 2704 sq.ft. house. Based upon the responses here; however, it seems that all of you feel the realtors neither should have noticed this inaccuracy nor had no responsibility to notify me of the inaccuracy.
Flag Sun Sep 16, 2012
Well written response. Thank you. All that you say is correct. I still feel I've been duped and I believe the realtors should have been able to differentiate a 2204 sq. ft. house from a 2704 sq.ft. house. Based upon the responses here; however, it seems that all of you feel the realtors neither should have noticed this inaccuracy nor had no responsibility to notify me of the inaccuracy.
Flag Sun Sep 16, 2012
Misty Mount, Agent, Yorktown, VA
Sun Sep 16, 2012
Also if it appraised over asking price why are you upset? Once you finish the area over the garage you would have even more sqft which will add more equity in the home. You should be happy!! Its a good thing. Are you maybe experiencing buyers remorse?
1 vote
That sould have said "bought our second favorite for $55,000 less", sorry about that.
Flag Sun Sep 16, 2012
Buyers remorse - I don't know about that. I've bought 3 homes previously and I've never as if someone has taken advantage of me so much. My wife and I debate about what we would have done if we had known the true square footage and had we remembered the number of bedrooms more accurately. I think we might have bought our second favorite choice for $80,000 less. That savings would have allowed us a lot of leeway to make improvements.
Flag Sun Sep 16, 2012
Misty Mount, Agent, Yorktown, VA
Sun Sep 16, 2012
Look at the tax records to verify the number of bedrooms. Even if the office is a bedroom if the taxes are paid on a 3 bedroom then that is what it is. It is not true that a bedroom must have a closet. Again that depends on the county code and what they consider a bedroom. The Planning Dept can answer that for you.
I would strongly recommend an attorney that specializes in real estate. You may....or may not....lose your EMD. Good luck.
1 vote
Tax records indicate it is a 3 bedroom home, but it was advertised as a 4 bedroom home and we thought there was a fourth legitimate bedroom. I suppose the office downstairs might qualify as a bedroom. We are stupid for not verifying this, but we had looked at so many properties that day and we had it in writing that there was a fourth bedroom. So now we have no place to put all of the furniture that is in our present fourth bedroom and no place to the grandparents to stay when they visit. I guess we will finish the area over the garage when we get the money to do it. Unfortunately it will require our elevating the roof in order to make this space connect with the rest of the house.
Flag Sun Sep 16, 2012
Carolyn Lidd…, Agent, Fredericksburg, VA
Sat Sep 15, 2012
Your first move needs to be to see a real estate attorney to ask this question based on the contract you signed. The attorney can tell you the possible ramifications of your decisions.

Next, ask yourself "Why do you really want out of the contract.?" You saw the home, you saw the finished and unfinished areas. You submitted an offer - price and terms, it was negotiated and you came to agreement. You had time to do your due diligence. Now why do you really want out ? Did your appraisal come in at or above your sales price? How have you been harmed? Do you think they were really trying to "Pull one over on you" if they used the tax records to indicate square footage? Did you have other opportunities to get out of the contract / other contingencies that you could have utilized: HOA, home inspection, appraisal, financing. And now you are concerned about square footage? Why?
1 vote
Anna M Brocco, Agent, Williston Park, NY
Sat Sep 15, 2012
The question can best be answered by your attorney, therefore consider a consultation....
1 vote
Maria Cipoll…, Agent, Coral Springs, FL
Sat Sep 15, 2012
Generally speaking, a sales contract does not have to mention the square feet of the property. The part that I have concern is where the contract stipulates that you are liable for the realtors comission if you are in default. If you really feel that you were misrepresentated in any part of the sales contract, no matter how small, is cause for a breach of contract. Your best option would be to contact an attorney and let him or her review the contract and see if there are any legal grounds for a breach of contract.

Best of Luck,

Maria Cipollone

Century 21 Tenace

http://www.Flahomespecialist.com
1 vote
I can not know the motivations of the selling agent, but it seems likely to me that an agent would be able to tell the difference between 2204 sq.ft. and 2704 sq.ft. The house is a recangle on top of a rectangle which the seller's agent indicates she did measure. The biggest reason I have to want out is that I do not want to be taken advantage of. As it is, we will be moving to a house much smaller house than we currently have; our furniture is not going to fit. It is a nice house and we love it, but it is just so much smaller than we were told - this will be a problem for us. Sorry, I'm talking too much - I'm quite anxious about the whole situation.
Flag Sat Sep 15, 2012
Misty Mount, Agent, Yorktown, VA
Mon Sep 24, 2012
Russ I tend to agree with you...almost. If I have a client that us purchasing a home and I feel certain things may be an issue I tell my client. I will not necessarily do the legwork but the fact is we are here to represent you and it entails more than paperwork.
My very first clients were purchasing a foreclosure and I used my nail file to pop of a piece of trim that looked wet and low and behold we found the basement had never been waterproofed and to fix the issue would be in excess of $40,000!! My buyers were devestated they lost their dream home but were grateful to me. I never had to mention it to them and the home inspection had already been completed. I hope everything works out for you. In the future get a very thorough home inspector. A good one will also bring up issues you may not be aware of
0 votes
Good Job finding the water in the basement. My realtor did point out settlement issues and other things with houses, but apparently did not not notice the square footage issue.
Flag Mon Sep 24, 2012
Vivianne Rut…, , Fairfax County, VA
Mon Sep 17, 2012
"When I bought my current house, I requested and was given a signed statement indicating there had never been any damage due to flooding. 2 years later the house flooded and I received documentation from the insurance company documenting 3 prior flooding events where in 1 flood there was $60,000 in damages. Was it my responsibility to figure this out? I like to trust people, but they need to be held accountable when they provide false information."
**************
It was a misrepresentation on the seller's part, but also your insurance company should have known about the flooding and should have informed you about it before you purchased the house - I'm surprised they did not do that as most insurance companies are very selective about water/flooding coverage.
0 votes
Actually, I don't think the National Flood Insurance Program, where I have my insurance, is in any way selective.
Flag Tue Sep 18, 2012
Russ, Home Buyer, Belle Haven, VA
Mon Sep 17, 2012
Thank you for all of the replies that you have given. I've been pleased by the response I've received. I've not been so pleased with what your answers have been, but I appreciate knowing how you in the industry feel. This was the first house I've ever bought where I've been represented by an agent. It was my feeling that having an agent meant that there would be someone looking out for my interests, but it seems from the longer of the replies that you guys generally feel that the burden is upon myself alone to verify everything in the listing to see if someone is misrepresenting the house. Perhaps the folks with the shorter replies advising me to seek council are more inclined to see things my way. Honestly I feel that in misrepresenting a house, the realtor is acting inappropriately and if I sign a contract based upon those misrepresentations I am not bound by the contract.

At any rate, the seller offered a small concession in price and I decided to proceed with the purchase. I'll be signing the mortgage in 3 days.

I've got to say that if I ever buy a house again, I'll do something different - Perhaps I'll insist upon the inclusion of a statement holding the seller accountable in some way for any misrepresentations. This accountability would seem to go without saying to me, but I guess it needs to be stated.

How often are things misrepesented like this? When I bought my current house, I requested and was given a signed statement indicating there had never been any damage due to flooding. 2 years later the house flooded and I received documentation from the insurance company documenting 3 prior flooding events where in 1 flood there was $60,000 in damages. Was it my responsibility to figure this out? I like to trust people, but they need to be held accountable when they provide false information.
0 votes
Harriet Harv…, Agent, Oradell, NJ
Mon Sep 17, 2012
Russ, there are many things that can allow you to cancel a contract, but your realtor is correct on this point. If that 500sq ft. difference is making you want to cancel your purchase, you obviously do not love this house and that is your problem. Buyer Beware, do your homework and stop pointing fingers. She did her job, the bank did theirs by having the home appraised. Customarily, the realtor does not have access to the appraiser's report. She's lucky if she gets to learn what the value was they came up with. You did not do your own homework to see if this unfinished space was included in the square footage of the home. You seem to have a good case to appeal your towns assessment, but in my opinion, since you're paying taxes on this unfinished space above the garage, make the best of it. Buy your house and be grateful you can!!
0 votes
Russ, Home Buyer, Belle Haven, VA
Sat Sep 15, 2012
Thank you for all of the replies. I'll try to answer some of your questions.

The Appraisal listed a value for the house just $2,000 above the contract price with a note in the appraisal indicating that homes in this market often will sell below the appraised value due to market conditions.

I had only one day to look at houses, so we looked at about 10 houses in 8 hours or so. We really only spent 15 to 25 minutes in each house and I thought there was a fourth bedroom in this one. The appraiser says there are 3 bedrooms, but the agent that is representing me says the office qualifies as a fourth (I don't know if there is a closet). We made our decision to purchase based upon the statistics provided as much as we did the visit to the house. Had we known the dimensions of the house, we would likely have purchased a house in a nicer neighborhood that listed for $50,000 less.

I may seek legal advice, but my attorney had to recuse himself due to his contact with the seller.
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Sat Sep 15, 2012
Did you see the house? If you saw the house you knew how big it was. Are you buying it my the square foot?

There are a million ways to Sunday to calculate square footage. If it was that important to you, why didn't you measure it yourself?

Your question is a legal one, so I won't attempt to answer it.

I will, however, say I think it's bologna. You knew how big the house was if you saw it, and you're getting what you saw. The owner didn't "unfinish" space after it went under contract.
0 votes
I trusted the seller's agent and felt mine would alert me of problems. The brevity of time spent in the house required us to trust the agents. Time did not allow us to measure the houses. At the end of the day this was not our first choice, but as we looked at the numbers (sq.ft., # of bedrooms, etc.) this house rose to the top. On paper this house fared better than it should have due to the listing stating there were 4 bedrooms and 500 "extra" square feet. Had we been comparing homes on an equal footing, we would likely have chosen what is in retrospect a better value in a better neighborhood.
Flag Sat Sep 15, 2012
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