I am in a fully executed contract. The seller's lawyer already cashed my down payment check. We agreed to a selling price of 149,990.

Asked by Devastatedmomof2, 11798 Sun Jul 10, 2011

The home was appraised for $120,000. The seller put the house back on the market for $169,000 while we are still in contract. He has been showing the house for 6 days. What are my options? The seller is refusing to be realistic and sell the home at it's appraised value. I have an FHA loan, so the appraisal is on record for the next 6 mos to a year.

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9
Don Tepper, Agent, Burke, VA
Sun Jul 10, 2011
Just get your money back. Presumably you had a financing contingency. If so, and the appraisal came back $30,000 low, then you should be covered.

One question, though: Where was your real estate agent? Your agent should have run comps on the property and determined that its value was in the range of $120,000. OK, maybe $130,000, maybe even $135,000. But how'd you end up offering at least $149,990 and agreeing to $149,990? That's way, way over what you should have done.

Sellers can continue to have their homes shown while under contract. Usually being under contract (at whatever price) will severely reduce the number of people looking . . . but it is permissible. As for raising the price to $169,000--I agree that the seller doesn't sound realistic (or even perhaps rational).

My guess is that the seller can't afford to sell the home at the appraised value.

So, at this point, just get your deposit back. And next time make sure your Realtor runs comps on any home you're going to make an offer on.

Hope that helps.
4 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Wed Jul 20, 2011
The #1 thing you SHOULD do is meet with your attorney and see about getting your good faith deposit back. Any standard residential Real Estate contract has language that protects you from loosing your deposit in this sort of situations. The seller seems to be in denial. Considering how the market is these days, I can't think of a single reason why you should over pay for a house in Wyndanch. There are too many good deals out there for you to get yourself in this sort of situation. If there is anything I can do to help, feel free to contact me.

Javier Meneses
Sterling National Bank
516-606-9648
1 vote
Anna M Brocco, Agent, Williston Park, NY
Sun Jul 10, 2011
Your agent and or attorney can best advise, therefore consider a consultation...
0 votes
Annette Levi…, , New York, NY
Sun Jul 10, 2011
Martina is correct, the seller's lawyer is obligated to put your contract money in an escrow account. Your lawyer should be contacting the seller's lawyer. If you had a mortgage contingency clause in the contract, and your lender sent you a mortgage turndown, the the seller's lawyer must return the money.
Has your realtor (and for you out of state realtors, it is not common to use a buyer's realtor in NY) spoken to the seller? The seller cannot put their house on the market with a fully executed contract.
0 votes
Martina Ryan, Agent, Bayside, NY
Sun Jul 10, 2011
The sellers attorney is just holding your check in escrow this is standard procedure. If your appraisal came back lower than your mortgage price, then you should have no problem getting your deposit back and canceling the whole deal if this is what you want. Call your attorney & let him know you want this done.
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Sun Jul 10, 2011
To add to Don's comments... do you not want to buy this home anymore, and do you want to get your down payment/earnest money back?

Since you were using an FHA loan, did both you and the seller sign the "FHA Amendatory Clause"?

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi…
http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?addr…

It states:

"It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser has been given in accordance with HUD/FHA or VA requirements a written statement by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender setting forth the appraised value of the property of not less than $YOUR SALES PRICE. The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation..."

If you did, then even with a financing and appraisal contingency waived, I've seen my own borrowers be able to get their earnest money deposit back.

Were they an exempt entity from having to sign one? If not, then I'd have your real estate agent contact the seller's attorney to get your earnest money back, if they refuse, I'd make sure to have this information on hand.

Exempt entities: http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?addr…

If you still want to buy it, the seller has no obligation to sell it to you for the appraised value unless you wrote a special clause like that into your purchase contract (which I think any seller would be silly to sign something like that), and so the only way the price of the home is going to change is if both you and the seller agree on a new price.

To help out with that, I would recommend you go over the appraisal first to make sure it's as accurate as possible, seeing why the comparables used on the appraisal were not the same as the ones you and your agent looked at when you made your offer, or if they were the same comparables then why didn't they "compare" like you anticipated they would. Your loan officer & real estate agent can help decipher the information. If there seems to be some inconsistencies with the appraisal your loan officer can prepare a revision request for the appraiser to review and consider, and either make the appropriate changes or explain in writing why those revisions won't be warranted.

With that process already taken care of, I think you'll have a better chance at negotiating a new lower sales price.

But putting it back on the market for $169k tells me they are sending you and whoever did your financing a strong message that they are probably not willing to negotiate.
0 votes
Ron Thomas, Agent, Fresno, CA
Sun Jul 10, 2011
Don has some excellent points here, and I gave him a THUMBS:

But one thing you said really threw me:

How can the Seller Lawyer cash your Down Payment check? That should either be made out to the TITLE COMPANY or your LENDER!!!

Did you possibly mean to say your DEPOSIT check? The difference could be $3,000 as opposed to $30,000.
The DEPOSIT should be easy to get back, especially from a Lawyer.

But Don is right: WHERE THE HECK WAS YOUR BUYER'S AGENT WHILE ALL OF THIS WAS GOING ON???!!!

Good luck and may God bless
0 votes
Jacques Ambr…, Agent, Forest Hills, NY
Sun Jul 10, 2011
I agree that the broker should get involved here, but why not offer a little above the appraised value to induce the owner to consider it. Mabye with you coming in higher he may come to a realistic number. Have a CMA done for yourself. Appraisals can be very "dry" numbers, not taking into account the future market projection etc. If you are planning to live there for any length of time, then paying a little more than the appraised value may be worth it to you.

Otherwise, just get your down payment back and move on.
0 votes
Gail Gladsto…, Agent, 11743, NY
Sun Jul 10, 2011
Have your attorney get your down payment back. There is nothing you can do with a seller who is not in touch with reality.

You will find a better home.
Web Reference:  http://gailgladstone.com
0 votes
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