9306faith, Home Buyer in 92691

FHA 203 K loan, the appraisal comes in low and the seller will not budge. Isn't it HUD who regulates and the return of a deposit is mandated?

Asked by 9306faith, 92691 Sat Nov 27, 2010

Help the community by answering this question:

+ web reference
Web reference:


Greg Cornwell, Agent, Laguna Hills, CA
Fri Jan 13, 2012
It's hard for a seller to keep your deposit no matter what the circumstances, because you have to agree in writing to release the money to him. If you don't agree, then it holds up selling the home to someone else. So in most cases the seller will authorize release of your deposit, or negotiate for a smaller amount. This is besides all the other reasons you have to get your money back as stated by the other agents.
0 votes
Edward Soren…, Agent, Davis, CA
Sun Dec 5, 2010
Hello 9306faith,

I can give you a step by step idea of what to do in this situation. Please keep in mind that I do not know all of the facts of your situation and have not reviewed the documentation related to your property purchase, but this is where I would start:

1. Contact the escrow company handling your real estate transaction.

2. Request a copy of the "Fully Executed Contract" for your real estate transaction (I am assuming you are using the latest revision of forms from the California Association Of Realtors and that you are using the latest revision of those forms).

3. Go to Page 8 of the California Residential Purchase Agreement And Joint Escrow Instructions (Form RPA-CA).

4. Look at Section 30 ACCEPTANCE OF OFFER. What is the date of the CONFIRMATION OF ACCEPTANCE? That is first "day" of your transaction. If the line is blank, consider asking for a clarification from your real estate agent.

5. Go to Page 2 of the California Residential Purchase Agreement And Joint Escrow Instructions (RPA-CA).

6. Look at Section 3 Subsection I APPRAISAL AND CONTINGENCY REMOVAL. Do you have an appraisal contingency or was it waived? If you do have an appraisal contingency, how many days are allowed before you must remove your appraisal contingency or cancel the contract? It might be 17 days, but that is not guaranteed.

7. Is this a Bank Owned Property (REO)? If so, did you sign an addendum to the contract that modified the terms of your appraisal contingency as described above? It is not uncommon for a REO to have language in a standard contract addendum sent back to you from the bank who owns the property modifying the appraisal contingency removal after you submitted your original offer.

8. Has the seller sent you a Notice Of Buyer To Perform (Form NBP) requesting that you remove your appraisal contingency (if you have one)?

9. If you have received a notice to perform, did you sign and send back to the seller a Contingency Removal (Form CR) removing your appraisal contingency?

10. If you have an appraisal contingency clause in your contract ,and you have not removed your appraisal contingency in writing, consider having your real estate agent prepare a Cancellation Of Contract, Release Of Deposit And Joint Escrow Instructions (Form CC) and request a return of your entire deposit amount.

11. If the seller refuses to return your deposit, go to Page 7 of the California Residential Purchase Agreement And Joint Escrow Instructions (Form RPA-CA).

12. Look at Section 26 Dispute Resolution. How much was your deposit amount? Getting your deposit back may require you to go to mediation or arbitration or small claims court depending on who has jurisdiction.

Thank you for asking your question, and I hope my answer helps.


When It's Time To Sell Your Home, Over Paying Is Over Rated
Sell Your Home Or Investment Property-$4,995 FLAT FEE
Full Service At A Reasonable Price

Edward Sorensen, Broker
Sorensen And Associates
DRE# 01724671
0 votes
Meredith Dre…, Agent, Aliso Viejo, CA
Sun Nov 28, 2010
Hi there.

The other agents have hit it all on the head! You need to check your purchase contract for the appraisal contigency and you should also seek advice from your agent. I'm sure they are aready on top of this!

Best of luck!
-Meredith Drews
Web Reference:  http://www.meredithdrews.com
0 votes
Connie Bramb…, Agent, Rancho Cucamonga, CA
Sat Nov 27, 2010
Hi Faith,
No, it is not HUD that regulates what is happening to you right now. It is your contract with the seller. Check your contract and see if you have an appraisal contingency. It is preprinted in the contract; but can be used or not depending on what you chose to do when you made the offer. Almost always the contingency for the home appraising for at least sale price is there. But not always, you need to check. Also there is a time frame for which you can back out because of a low appraisal. That too will be in the contract, check it out. If it is there, you need to give written notice to the seller and the escrow company to cancel. Tell the escrow company you want your money back. Under these circumstances you really should not be charged anything by anyone, except unfortunately the appraiser. That person will want to be paid and it is a buyer cost.
Has your agent tried to get the appraisal up to the sale price? Did you go into this knowing you were overpaying; and just hoping the seller would sell at whatever the value was?
If you are off just a few thousand you may want to try sending the seller a heartfelt letter ppointing out that the FHA appraisal will stand for 6 months; and no one else will be able to purchase their home FHA at a higher price. Some sellers are not aware of that. How long will it take them to get a conventional offer? Maybe it is in their best interest to deal with you and reduce the price. Maybe you could pay down a little to offset the difference. Perhaps if you both share the costs? Maybe that could work!
Best of luck to you,
Connie Bramble
Prudential CA Relaty
0 votes
Anthony Mend…, , Orange County, CA
Sat Nov 27, 2010
Under the existing California Association Realtor buyer's forms you have 17 days to cancel your offer without any penalty to the Buyer you can cancel and Escrow should refund your earnest deposit
0 votes
Cynthia Flem…, Agent, Laguna Niguel, CA
Sat Nov 27, 2010
If the appraisal came in low and the seller will not adjust his price, you do not have to move forward with the sale if you have an appraisal contingency in your contract. This is sufficient reason to void the contract unless you can come to terms on price. Sounds like you cannot however, so if you are within the contingency period, you should get your deposit returned.
0 votes
JoJo Harmon, Agent, Laguna Niguel, CA
Sat Nov 27, 2010
I'm not quite understanding your question. Could you explain it a little further?
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more