Home Buying in Wichita>Question Details

Darin, Other/Just Looking in Wichita, KS

MLS Data is grossly inaccurate, should I get my earnest money back?

Asked by Darin, Wichita, KS Wed Aug 15, 2007

I recently agreed to purchase a home, and our closing was set for a few days ago. At the closing table, I discovered that the MLS data sheet provided to me showed more square footage on the main floor than actually existed. In Kansas, main floor square footage is very important, and this MLS sheet indicated that the main floor had 523 more sq feet upstairs than it actually has. Instead, the 523 sq ft is actually in the basement. This turned my cost per square foot from $90 sq ft up to $113 per sq ft. In addition, the realtor cited the court house as the source of information, but the courhouse shows a different number (300sq ft less total). Upon being question, she said she actually got the information from the sellers, not the court house. My question is whether I am justified in walking away from this deal, and should I get my earnest money and expenses back? I know MLS's say I they are not guaranteed, but the seller has a responsibility to advertise accurately.

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Here is my take on everything, correct me if I'm wrong:
The price/size difference in your mind is about 12-20%
You still want and can afford the house at 12% below your contract price
You had a home inspection and eliminated that contingency
The home appraised for the sales price
"Time is of the essence" was not in the contract

What do you know about the seller's other 2 appraisals? What sq ft did each say?

Did you check your appraiser's math and method? How much did your appraiser adjust for size differences on the comps?

Is the home a split level where the sq ft in question could be a judgment call?

My opinion:
Your time to object was during the contingency periods.
You expected the appraisal to come out higher than what you were paying.
"Grossly inaccurate" is really just a "discrepancy".
You will lose your earnest money.
You will not recoup any expenses.
Only the lawyers will win in mediation or court.
Your lawyer should have held some of the seller's funds in escrow until the garage door situation was remedied and the sellers do have to fix that or credit you.
Loosing the rate lock was your fault.
You can probably negotiate with the sellers and agents an agreement to walk away with no further actions, legal or otherwise.
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1 vote Thank Flag Link Wed Aug 15, 2007
Ruthless, Other/Just Looking in 60558
Regardless of the fact that both agents are from the same brokerage; your agent has a fiduciary responsibility to look out for your best interest. If you feel this is not the case, you need to contact the broker directly and have him/her step up to the plate.

Again, if this does not bring satisfaction or a common ground you will probably need legal representation. I hope it doesn't come to this as noone wins these types of situations. The question you have to ask yourself is - do I still want this home?

If it is a positive response - square footage really shouldn't matter. If you are standing on principal and the sellers don't want to budge on a credit - it's attorney time....
1 vote Thank Flag Link Wed Aug 15, 2007
Well, where I live and practice real estate it clearly states in our contract that the buyer is to verify all information within the 10 day inspection period, which includes square footage. My buyer would not be able to back out of this transaction because we had passed the 10 day inspection period, but if it did not appraise for the amount that he bought it for BECAUSE of the short fall in sq footage he would be able to.

My suggestion would be for you to contact a real estate attorney or at the very least contact your agent's broker. Is your Realtor working as a "buyer agent" for you or is she the listing agent and she is representing both "sides"? There is a lot to consider and more questions than I have answers for, but the biggest thing that will hinder most of us trying to respond to you will be your State laws and how your contract reads.
Best of luck to you,
Gloria Handley
RE/MAX Achievers
Chandler Arizona
1 vote Thank Flag Link Wed Aug 15, 2007
Hi Darin:
This is a sticky situation and is the reason most home sellers do not like to include square footage. You need to refer to your contract and speak with your agent. If you have been misinformed you may have had to "discover" this within the first few days of signing the contract. If no sitings were found within that time frame the home is sold - "as is".

However, having said all this, I would definitely seek the assistance of your realtor in seeking "restitution" from the seller. If they were the source of the Sq. footage computation and they are reasonable - maybe you can meet in the middle insofar as a credit to you is concerned.

Your terminology states "grossly inaccurate" and it sounds as if all movement halted at the closing table. This then implies that the sellers are aware of the fact that you feel "misled".

It would then behoove you to seek a middle ground somewhere, rather than lose the home you desired and/or the deposit you placed. The MLS is not culpable as it only receives information it is fed. In this instance; you may have been the party responsible for verifying the facts as they were presented.

So sorry for your predicament. Please keep us abreast of your status; as this is a case study we can all learn from!
1 vote Thank Flag Link Wed Aug 15, 2007
Tough one there...practices differ from state to state. Why did you and/or your agent wait until "the closing table" to investigate this? Generally (at least in California), the buyer must investigate any and all conditions affecting a property, square footage included, and satisfy himself/herself with regard to the findings. Have you formally removed your contractual contingencies? If you have, you may be out of luck, and your deposit may be in jeopardy.
Web Reference: http://www.sacreblog.com
1 vote Thank Flag Link Wed Aug 15, 2007
Erin Stumpf…, Real Estate Pro in Sacramento, CA
it isn't that we wanted out. in fact we sold our home and had everything packed and ready - now we do not have a home at all. We just had plans for investing money into this home in upgrades b/c we thought we had the margin available and were buying below market, not at market. We certainly looked at the house, but square footage can be deceptive to someone not in the biz every day, especially in a 11/2 story home w/ several rooms.
0 votes Thank Flag Link Wed Aug 15, 2007
Just read your other answers.More going on here than we know I suspect.Sounds like you wanted out anyway.
I don't think they misled you on purpose, Do you really believe that? If you do think it was malicious and intentional , then maybe.
How much is your earnest money by the way?
How about offering to split it and moving on to avoid the headache.Otherwise money will sit there forever until it is resolved.
Once attorneys get involved it drags things out so long.Stress is unbearable.I see fault on both sides here even if it was not intended.Hopefully money not too much and you can both move on.
Good Luck.
0 votes Thank Flag Link Wed Aug 15, 2007
You never saw the house? Here in PA square footage includes celings and all.MLS data not guaranteed.Even public records may be incorrect.
I had this happen and buyer got out well before settlement.(inspection time frame still)They didn't feel footage was represented correctly.But had we not, probably not good enough reason to get out legally.You shouldn't have waited till the table to discuss that.
Seems wrong to me, that you didn't settle that day because of that.You saw the house well before and still liked it.
I'm wondering why your agent fibbed about checking at courthouse for you.
0 votes Thank Flag Link Wed Aug 15, 2007
Another angle I am considering is that there was damage on the property discovered on the day of closing during the final walk through, and the seller refused to repair the damage. The garage door had a crack that ran half way across one panel. We requested that the seller repair or replace the crack, and they refused. We never responded with acceptance of the condition after that point. As a result of their refusal to repair the damage, the closing did not occur and my rate lock expired on my loan. They have a photograph of the damage that was submitted to them by the agent.
0 votes Thank Flag Link Wed Aug 15, 2007
#1...check with your attorney. #2...check with your agent. #3....what does the appraisal state? If all you list is accurate and you like the house why don't you renegotiate. Tax roles can be inaccurate as well.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Aug 15, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
There are 2 separate agents, one representing me as buyer and one representing seller. However, they both work for the same brokerage firm.
0 votes Thank Flag Link Wed Aug 15, 2007
Yes, I have spoken to 2 attorneys (1 litigator, 1 real estate transaction), in addition to the Kansas Real Estate Commission complaint office. At this point I haven't filed anything formal, but am certainly willing to if I don't feel like the parties involved are cooperating w/ me. My biggest concern at this point is not so much whether I get the earnest money, but ensuring that the relocation company / sellers on the other side won't seek any other recourse above and beyond. Mainly specific performance or claim damages. I don't think those claims would hold up in mediation or court, but I honestly don't want the headache.

By the way, thank you all for all the feedback, I really appreciate everything.
0 votes Thank Flag Link Wed Aug 15, 2007
In most states, it's buyer beware. A very similiar situation happened in Georgia and it resulted in a law suit. What happened afterward - Now NO one gets to know the square footage unless they do their own due diligence.

Here's my advice (it's blunt) if you're buying square footage, then sure walk away from the deal, you're only concern should be getting the most square footage for the money. More than 90% buyers buy on floor plan and "feel" - it's all emotionally based (yes, believe it or not!) so it most likely won't hurt you.

Did you not see this house before closing? DId you think there was a hidden bedroom somehwere?

What did your buyer's agent say about the law there? In most states, you'll have to prove a hard case that you were truly deceived. In those cases, you're NOT justified at all and would be subject to losing your E.M.

Of course, as a CYA for me, I don't live or work there, so what do I know! Good luck, hopefully you can enjoy the home.
0 votes Thank Flag Link Wed Aug 15, 2007
Joshua Jarvis, Real Estate Pro in Duluth, GA
In Kansas we have some real problems with reporting square footage. When I sold real estate in Tulsa we always included square footage with the understanding that the buyer and their appraiser should verify.

In Kansas City hardly anyone reports square footage for the reasons you have come across. Then, with all our split level homes, how do your report above grade or below? Splits have levels that encompass both above and below!

My first reaction is to tell you to negotiate with your real estate agent's broker. The broker is going to recognize this as a problem. But to some degree it's the buyer's responsibility and right to verify everything about a house. That's why there is an inspection period.

But don't listen to me. I would check around for a good real estate attorney and take their advice. You are certainly not the first person in Wichita to have this issue. Best of luck to you.
0 votes Thank Flag Link Wed Aug 15, 2007
Hi there,

Sorry to hear about your sq. footage shocker. That is a big difference!

Do keep in mind, however, that although Buyers often like to compare listings they're considering based on the price per square foot, this is not always the most accurate way to figure out if you're paying a fair price for a property, unless you're looking at homes in a new development where the homes are all similar, or at condos in a specific area (at least here in Chicago).

However, with that said, although the price may or not be an issue, you are also correct in assuming that there is liability involved in this situation due simply to misrepresentation.

Square footage is a material fact that must be accurately disclosed when used in advertising property for sale (or rent), and when there is a listing agent involved, it does become the responsibility of that agent for ensuring this information is accurate.

There have been cases of licensees being disciplined in the past for quoting inaccurate square footage. The disclaimer statement you mentioned found on most MLS sheets which states, "Information herein deemed reliable but not guaranteed," will not always protect the agent from the Commission seeking disciplinary action when he/she advertises inaccurately.

Have you talked to a real estate attorney to see what your options are?

Good luck!
0 votes Thank Flag Link Wed Aug 15, 2007
Actually, the only reason it was discovered was b/c we asked to see the bank appraisal and comps, and that is where the error appeared. I agree, in hindsight I guess we should double check the sq footage, but in Kansas there are no formal documents certifying size like in CO, and other states. The only information provided to me was the MLS data. And now that I have reviewed the contract, it appears to me that buyer and seller both have a responsibility to provide / verify accuracy of information. In this case, the sellers had 2 other appraisals from other sources, plus the courthouse which they cited, showing their advertisement of the property was wrong. In my opinion, that would border on negligent misleading, whereas the listing agent representing seller failed to perform their job and resulted in this outcome
0 votes Thank Flag Link Wed Aug 15, 2007
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