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

Buying & Selling Real Estate
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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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  • Maurice D.
    Coppell, TX · Member since 2015 · 485 posts · 310 votes
    4y

    How much DD money are we talking about? depending on the amount you either walk away from it (lesson learned), or talk to an attorney. In this case there is an MLS error by part of the Agent, not sure if that is covered by their error & omissions insurance? not sure if it applied to buyer..

    Example error and omissions coverage:

    https://www.williamsunderwriti...

    "
    6. Property Size/Acreage/Easements, etc.: This involves errors, often in the
    MLS listing, regarding square footage, wrong acreage amounts, not
    disclosing utility, road or other easements,

    "

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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    4y

    Question: When you saw the property was the lot lines obvious (fencing, etc.)?

    This DD money is new to me and not something in my market, but I trust some of the people who have responded (Russel and Jay in particular).  

    In my market the offer has a section that by default calls for arbitration.  Arbitration is likely to your advantage because it is likely to be a less expensive option than consulting a lawyer.  In addition, the request for arbitration may be enough that the seller offers something to avoid arbitration.  I am not an attorney, but suspect your case is the weaker of the 2 sides because the listings always indicate for you to verify the information.  However, the hassle of arbitration and the small risk that the seller could lose the arbitration may result in an offer to refund some of your DD.

    I personally think that both parties have some culpability.  I think it is unlikely you will get your entire DD or even 50% of your DD in part because I suspect there is text that indicates verifying the data is the buyer's responsibility.

    Good luck

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  • Sam Hopkins
    OH (ohio) · Member since 2016 · 63 posts · 43 votes
    4y

    @Tikka Koti in my opinion this is a material breach of the contract by the seller (it is the seller even though it was the agent as they represent the seller). A material breach was generated because they misrepresented an item that had a large financial impact on the value of the property (the land being 40% smaller). It’s not like they misrepresented the age of a hot water tank.

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  • Lydia S.
    Real Estate Agent · Albuquerque, NM · Member since 2015 · 542 posts · 193 votes
    4y

    @Dan H.

    I suspect you mean mediation, which typically comes before arbitration.

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  • Adam SchneiderPro Member
    Lender · Raleigh, NC · Member since 2012 · 957 posts · 639 votes
    4y

    @Tikka Koti

    There are two issues on your post. The first issue has to do with NC being a bit quirky regarding deposits. NC has two possible deposits-- a Due Diligence and an Earnest Money. The DD is non-refundable and the EM is refundable during the DD (inspection) period.

    The second issue is whether the listing had a material mistake. For the square footage of the house, agents in the Triangle MLS are given 5% cushion regarding accuracy. However, there hasn't been much said about lot accuracy requirement. That's probably because everyone expects the public records to be accurate. So, there's a question about whether or not the buyer agent has a responsibility to check public records versus the MLS stated size.

    You might want to reach out to either the listing agent's BIC (Broker In Charge), or the NC Real Estate Commission to get an opinion on this one.

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