Wrong lot size on MLS, under contract in due diligence period

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Wrong lot size on MLS, under contract in due diligence period

Tikka Koti
Member since 2021 · 3 posts · 0 votes

Help Help Help!!! We are first-time homebuyers in NC and are going through a very tough situation.

We recently went into a contract and are currently under the due diligence period. We found that the Seller agent mentioned the wrong lot size (approx 40% higher than the actual lot size) on MLS and decided to back out. But Seller declines to give our DD amount or to further renegotiate, though it is a big mistake from them. The seller's agent simply corrected the MLS now and claims that it is just a typo.

- What action can we take on the Seller's agency or Seller, to get our DD money? We are still under the due diligence period.

Please Help!!! We are first time home buyers in NC and are going through very tough situation.

We recently went in to a contract and currently under due diligence period. We found that the Seller agent mentioned wrong lot size (approx 40% higher than the actual lot size) on MLS and decided to back out. But Seller declines to give our DD amount or to further renegotiate, though it is a big mistake from them. Seller's agent simply corrected the MLS now and claims that it is just a typo.

- What action can we take on the Seller's agency or Seller, to get our DD money? We are still under due diligence period.

Thank you!

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Marian Smith
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
4y

@Tikka Koti Are you planning on adding a second building and now the lot size is too small per zoning? Or what you considered part of the parcel is now known to be a neighbor's land? Or just feel cheated? Because if you were happy with the house prior to discovering the lot was smaller than stated then just buy it...or forfeit your deposit if you think it will eat at you forever. Everyone gets buyers remorse. There is also remorse for not buying. I have suffered both.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y

    Thats why you pay due diligence money in North Carolina....to do due diligence. You did your due diligence and decided you didn't want to buy the property and decided to opt out of the contract. 

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  • Tikka Koti
    OP
    Member since 2021 · 3 posts · 0 votes
    4y

    Thanks Russell,

    But Seller is not giving our DD amount, if we opt out of the contract. Can we file a law suite against them, as it is their mistake?

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y

    No, again, thats what you paid the money for...for them to take the property off the market so you can do your due diligence. You did your due diligence and decided not to proceed. You dont get the money back. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    How much EMD is it? Pushing to get EMD is usually a lost cause unless it's a amount that's a lot

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y

    Probably not eligible for refund. Read this NC state document explaining it. If the seller materially breaches the contract you may be eligible. Talk to an attorney.

    https://bulletins.ncrec.gov/du...

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  • Chris London
    Property Manager · Raleigh/Durham NC · Member since 2015 · 210 posts · 293 votes
    4y

    @Tikka Koti, Joe Splitrock above just provided the NC Real Estate Commission guidelines on when DD is refundable. Your real estate agent is NOT the person to interpret if this is a material breach, you will need to pay an NC Real Estate attorney to do this. While I have never personally gone done this road it is my general understanding that the chips are not in your favor, unfortunately.

    2Reply
  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    4y

    @Tikka Koti Are you planning on adding a second building and now the lot size is too small per zoning? Or what you considered part of the parcel is now known to be a neighbor's land? Or just feel cheated? Because if you were happy with the house prior to discovering the lot was smaller than stated then just buy it...or forfeit your deposit if you think it will eat at you forever. Everyone gets buyers remorse. There is also remorse for not buying. I have suffered both.

    5Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y

    @Tikka Koti I assume you have seen the property before you made the offer? It's a bad typo and it should not have happened, but hoestly most people have no idea if what they are looking at is a 1/4 acre or 1/2 acre. Heck, it is hard for me to tell sometimes. If the yard is big enough or not is often a very subjective issue..

    Is that the reason you want to kill the deal or was there something else?

    If you simply got cold feet, know that this happens to a lot of people. Step number one is to acknoledge that. Revisit the resons you made the offer in the first place. Are these resons still there? Buying your first property can be emotional growth process; you have to get comfortable with being a little uncomfortable sometimes..


    PS - you killing the deal is causing real financial damage to the seller, they have to go back to market and look like damaged goods now. This is exactly why you give them EM in the first place.

    1Reply
  • Allen L.
    Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes
    4y

    @Tikka Koti I don't understand what everyone is saying, maybe this is a NC thing but everywhere I have bought properties if you are under DD period and cancel for any reason at all, the EMD is refundable. If this is not the case, did your agent promise you that your EMD is protected during DD?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Originally posted by @Allen L.:

    @Tikka Koti I don't understand what everyone is saying, maybe this is a NC thing but everywhere I have bought properties if you are under DD period and cancel for any reason at all, the EMD is refundable. If this is not the case, did your agent promise you that your EMD is protected during DD?

    it sounds like DD deposits are NON refundable in that state.. its like that in TEXAS with option money you will find many TEXAS contracts to have 100.00 options for 2 weeks which coincides with your 2 week inspection period.. you chose not to go forward you lose the 100.00 its not EMD its something different.

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  • Kristin Kiddy
    Real Estate Agent · Ormond Beach, FL · Member since 2017 · 216 posts · 158 votes
    4y

    I am also not a NC real estate agent, but my MLS has every edit to a listing recorded and time and date stamped. I would ask your agent to go back into the records and collect the edit history on the listing for your own records going forward.

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    4y

    You won't get your money back. Here is an article that goes into detail on DD for reference. I hope this helps.

    https://hunterrowe.com/due-dil...

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  • Tikka Koti
    OP
    Member since 2021 · 3 posts · 0 votes
    4y

    Thank you all for your feedback!

    I totally understand DD fee is generally non-refundable, with an exception of the clause if 'Seller breaches the contract'.

    - Wouldn't this be counted as a breach since the lot size mentioned on the MLS is very significant (Over 40%)?

    The lot size was one of our key criteria for getting in to contract. Also, we gave a big amount on DD. And you are right, we couldn't even doubt it until we visit the house for a second time. Even the agent's estimates or appraisal are based on this data. We provided them (agents) with the actual data. They have just changed the MLS and now conveniently describe this as a minor typo from them. Maybe they are taking advantage of any loopholes in NC real estate law?

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  • Craig Janet
    Member since 2019 · 223 posts · 261 votes
    4y

    How large of a yard or you talking about. Is it 10 acres 200 Sqft? 

    So you saw the house with the yard and liked it so much you made an offer. Then you found out it was a typo and now you hate it. It doesn't make sense to me.

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  • Scott JohnsonBusiness Member
    Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
    4y

    Good, you're in NC so I can at least help a bit. I attached a screenshot of our Offer To Purchase And Contract that is very clear when it comes to DD money. What you're attempting to due is prove a material breach of the contract because the agent had the incorrect lot size. My advice: Talk to a real estate attorney

    Once you pay the DD money, it's all over. That's the seller's money unless they breach the contract. Only an attorney can confirm whether or not they did. This is how people get hosed in an extreme sellers market. When DD starts going up, stuff like this starts to happen.

    Best of luck!

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y
    Originally posted by @Allen L.:

    @Tikka Koti I don't understand what everyone is saying, maybe this is a NC thing but everywhere I have bought properties if you are under DD period and cancel for any reason at all, the EMD is refundable. If this is not the case, did your agent promise you that your EMD is protected during DD?

    Some states have a due diligence, or an option fee that is paid from the buyer to seller for the right to conduct inspections. This is completely separate from an EMD, and there will typically be an EMD in addition to the Due Diligence/Option fee paid after the due diligence period. NC and Texas are the two that come to mind that use this. The fee is non-refundable, as opposed to the EMD which is often refundable.

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  • Greg H.Pro Member
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    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Craig Janet:

    How large of a yard or you talking about. Is it 10 acres 200 Sqft? 

    So you saw the house with the yard and liked it so much you made an offer. Then you found out it was a typo and now you hate it. It doesn't make sense to me.

    She indicated it was off by 40%.  So if you were interested in a house with an acre and it turned out to be 3/5 of an acre it would not make you reconsider?

    1Reply
  • John Brodeur
    Investor · Philadelphia Metro · Member since 2019 · 44 posts · 75 votes
    4y

    @Greg H. It depends on what my plan was for the property. If the property was being used as a SFR and the difference in lot size wouldn't change the rental price or the arv I was expecting then it really wouldn't matter. In that case I might (and I mean might) go back to the seller and renegotiate the price a bit (maybe get like 1 or 2k off the price or something), but would most likely still move forward with the purchase.

    If on the other hand the additional lot size was central to the strategy of the property (ability to sub-divide or build an adu, and addition, or get a zoning variance etc.) then I would most definitely re-run the numbers, and then go back to the seller with what the updated price should be with the adjustment. If the seller wasn't willing to budge then you walk away, and definitely consult with an attorney knowledgable in the specific state as earnest money, and the due dilligence process varies greatly state by state (as well as what is outlined specifically in the aos).

    This is also why it's tantamount to really understand what you are signing when you write offers, and know all of your back out points and when you can walk away from deals and how earnest money is handled. If you don't understand this when reading through your aos please ask questions of the real estate agent, a local investor, and/or a local real estate attorney. It will save you so much time and potential headache in the long run.

    1Reply
  • Jacob Maes
    Real Estate Agent · Dallas, TX · Member since 2020 · 92 posts · 46 votes
    4y

    How much money did you give for your due diligence money? Often times people will give 1% for earnest money then 100-150 dollars for their due diligence money. The DD you gave is not refundable. They can keep it as they take their home "off market" for you to inspect and see if you like it. But if you decide to opt out the DD belongs to them. 

    0Reply
  • Jacob Maes
    Real Estate Agent · Dallas, TX · Member since 2020 · 92 posts · 46 votes
    4y

    @Allen L. The EMD is refundable but the option period money is not.

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    4y

    Did you have an agent representing you? Did they outline for you that your DD money would be at risk should you choose to back out? If you did not use an agent, and are not familiar w/ local guidelines you may want to consider using one going forward. Tough lesson to learn. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Originally posted by @John Brodeur:

    @Greg H. It depends on what my plan was for the property. If the property was being used as a SFR and the difference in lot size wouldn't change the rental price or the arv I was expecting then it really wouldn't matter. In that case I might (and I mean might) go back to the seller and renegotiate the price a bit (maybe get like 1 or 2k off the price or something), but would most likely still move forward with the purchase.

    If on the other hand the additional lot size was central to the strategy of the property (ability to sub-divide or build an adu, and addition, or get a zoning variance etc.) then I would most definitely re-run the numbers, and then go back to the seller with what the updated price should be with the adjustment. If the seller wasn't willing to budge then you walk away, and definitely consult with an attorney knowledgable in the specific state as earnest money, and the due dilligence process varies greatly state by state (as well as what is outlined specifically in the aos).

    This is also why it's tantamount to really understand what you are signing when you write offers, and know all of your back out points and when you can walk away from deals and how earnest money is handled. If you don't understand this when reading through your aos please ask questions of the real estate agent, a local investor, and/or a local real estate attorney. It will save you so much time and potential headache in the long run.

    One thing to keep in mind pretty much every MLS system has a disclosure that the info on it should be double checked and that's why you have DD or inspection periods.. I like South Carolina's ? Charleston MLS it says clearly at the bottom of every listing is sq ft of lot or house Matters then Measure .. cant be any more clear than that.. Also if a lot is suppose to be 10k sq feet and its only 6 sq ft . Most folks upon physical inspection prior to writing a contract could see the error.. or maybe not I guess lots of folks cant visualize. Houses are listed all the time with sq ft discrepancy.. the county will have one thing an appraiser will have another and the agent put another sq ft in the listing.

    Bottom line though I suspect this DD money was very small and a lawyer would be WAY over kill cost more than the money at stake.. And good thing it was caught before they closed.. NEXT move on .. Plus most MLS purchase contracts have mandatory mediation in them anyway so those who jump right to get an attorney are not really giving real world advice its just knee jerk reaction like and attorney can fix these small simple squabbles.

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  • John Brodeur
    Investor · Philadelphia Metro · Member since 2019 · 44 posts · 75 votes
    4y

    @Jay Hinrichs, Agree with you that everything is relative to the dollar amount at stake, and the potential options. I was not suggesting to go to an attorney in every situation, but if the OP is not familiar with the legal ramifications of the earnest money, and the realtor is not able to advise, nor is there specific language in the AOS outlining mediation, or steps of who is due earnest money it might be wise to consult with an attorney to fully understand legal options. If the earnest money is a couple grand, it probably wouldn't make sense to potentially spend more than that in attorney fees to get it back, but if we are talking about 10k, 15k, 20k, or more (and depending on what part of the country you are in and the property value those numbers do happen), it might make sense to spend a few thousand dollars in attorney fees to get back 20k. Also, I am not an attorney, nor am I knowledgeable in the specific of the OP's state, which is another reason to specifically recommend consulting with an attorney or someone else the OP knows who is local who is knowledgeable in the area. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Originally posted by @John Brodeur:

    @Jay Hinrichs, Agree with you that everything is relative to the dollar amount at stake, and the potential options. I was not suggesting to go to an attorney in every situation, but if the OP is not familiar with the legal ramifications of the earnest money, and the realtor is not able to advise, nor is there specific language in the AOS outlining mediation, or steps of who is due earnest money it might be wise to consult with an attorney to fully understand legal options. If the earnest money is a couple grand, it probably wouldn't make sense to potentially spend more than that in attorney fees to get it back, but if we are talking about 10k, 15k, 20k, or more (and depending on what part of the country you are in and the property value those numbers do happen), it might make sense to spend a few thousand dollars in attorney fees to get back 20k. Also, I am not an attorney, nor am I knowledgeable in the specific of the OP's state, which is another reason to specifically recommend consulting with an attorney or someone else the OP knows who is local who is knowledgeable in the area. 

    I get it but keep in mind this is BP.. and the vast majority of the transaction involve smaller DD or EMD. these are not developers or those looking to split lots saying they relied on a listing for their lot size.. most who are doing value add lot splitting or developing will pull the county records.. or in our case order a trio that we will get in about 3 minutes on the computer for free from our local title company and that will have the tax records copy of the recorded plat map and last recorded Deed.. from there you can easily see how big the property is.

    Many tax collectors will have sq ft on the tax page as well..  so since none of this happened, I made the assumption that its not an experienced buyer or for that matter experienced agent guiding the process.  in most markets your going to blow 500 to 1000.00 just having an attorney review all the docs and most good ones wont even take a case like this not worth the clients time or their time. 

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  • Trey MorrisonPro Member
    Residential Real Estate Broker · Charleston, SC · Member since 2016 · 6 posts · 0 votes
    4y

    Was the lot size correct in the tax records? 

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