If there is something in the contract that stated you have to pay the difference ( which is in some contracts ) then you would lose the EMD. If there isn't, then the contract is void if you say so, and the bank appraisal can be shared as proof, and the seller should return the money within a reasonable timeframe.
Question, are their agents on both sides? No sides? Who is actually holding the deposit? If the seller has it, I would contact a real estate attorney or someone in efforts to make the process more serious, and typically I wouldn't let a seller hold the $, the attorneys always should in a worse case scenario. I would hit him with an additional letter from your atty or something that would say agree to amend the purchase price to 260, and reschedule closing, or , refund deposit by end of day ( 2nd, 4th, 5th, etc ) or face legal action. You'd have to check with someone but im sure there are laws about holding your money and being in violation of contract ( 93a in Mass - which makes him liable for treble damages, or 3x ).
I'm not sure what the laws are for Texas RE Law. You may want to reach out to an agent on BP that works in Texas. Unless you already have an agent.
Do you have the contract? My thoughts are that he is sweating you out, hoping that you'll come up with the 8k out of pocket. It sounds like you already signed the cancellation of contract, and he hasn't responded?
RE read what I wrote, if there is agents, have them execute what I wrote. Was looking for more info.
Even if there is a contract, some contracts state you have to come up with the money. Very common here in boston in a competitive market where stuff goes over asking.
@Remone Randolph It really depends on the terms of your contract. It's very common here in MA for there to be a financing contingency - BUT - that normally takes the form of a commitment deadline that's a couple of weeks before closing. No mortgage commitment, no sale, monies returned.
Others add a provision that the home must appraise at or above the sale price. If not, no sale, monies returned.
However, we do our appraisals as soon after P&S as possible and they come in weeks before closing, so if the house doesn't appraise, the buyer can exercise his mortgage contingency, because without the appraisal, the lender will not write the loan.
In your case, it sounds like you got the appraisal results just days before closing, so check your contract terms and dates to see if you're actually entitled to your deposits.
As far as the research, he may be looking for a way to challenge the appraisal.
By the way, two interesting things about FHA loans.
1. The appraisal must meet the purchase price, not the loan amount (price minus deposits).
2. An appraisal sticks to the property for 6 months. That will affect other FHA buyers down the road.
@Remone Randolph . You keep saying because it's an fha Loan and the appraisal came in low he can't keep your EMD. What's the contract say? If there's no appraisal contingency in the contract I think he may be able to keep your earnest money. I've never heard of the part about the fha loan and appraisal
Read your contract. Did you have a timeline for financing? Did you have a timeline for an appraisal? Were you within those dates?
Hi @Remone Randolph ,
It's only been 2 days. There are plenty of people who stick things in front of their lawyer before they sign them. There may be something in the contract he can use to get the EMD, there may be some wording that is specific locally to allow him to make a play for it. Your agent could have failed to sign the "FHA Amendment clause" or missed a signature block somewhere that you had to sign. He has time to research and decide his next move.
@Remone Randolph , I am an agent, I’m trying to help you. I asked questions you didn’t answer, the same that everyone else is asking.
In a contract it can state that you have to come up with the difference upon appraisal. Whether that is legal or not on an fha loan or not, I couldn’t tell you I’m not an attorney. Most people won’t be going to court over a deposit of such low amount anyway.
Just trying to help, we need more info.
What time frame is in the contract for how fast he has to sign a cancellation? What time frame is listed for him to return the funds in escrow?
The expectation that he is required to jump and put your cancellation request in the front of the line and address it right now, may be a little misguided. You had more than 2 days to do your contract approvals and inspections. He has more than 2 days to decide how he wants to handle your request.
Lol, good luck man. Never mind. Keep attacking people trying to help.
Then your best bet is to go into your lawyers office. Stand at the front desk and demand to be seen NOW, do not accept any excuses.
Once you get in demand your lawyer write a letter insisting for immediate return of funds and demand that he/she personally delivers it to the seller and then stand there until the seller signs. Then instruct your lawyer to go to where the funds are held and chain them self to a desk until they cut you a check.
Since obviously you know your contract better then anyone else in that state there is a whole profession that should just be removed and turned into carrier pigeons for their clients.
Originally posted by @Remone Randolph :
@Seth Williams attacking? Lol. Ok thanks anyway
The CONTRACT between you and seller CAN stipulate that you will pay the difference between the appraisal and purchase price. Just because FHA wont pay it doesn't mean you didn't agree to do it yourself.
There’s a hangup between the questions you’re receiving and the questions you’re answering.
Ask your agent about a cure notice. I think WA is pretty similar to AZ. Also your agent needs to talk to title/escrow. This is THEIR JOB, not yours. Your answers should be all coming from your agent not people who haven’t got a clue about what’s going on.
@Remone Randolph I am surprised that the realtors have not offered some concession to help close it. Even if each gave up $2000 and the seller gave up $4000. Or maybe you can put in another $1000 or something. Sellers agent needs to figure out why their comps didn't match the appraisal. Maybe they can work with the appraiser to correct. It is a realtors job to figure problems like this out. If your realtor isn't willing to help, maybe they can sign themselves out of the deal and there is your $8000. I would get on the phone and tell the realtor it is their job to figure this out, present the options I mentioned and see what they say.
I am not one to cut a realtor out, but any good realtor would be hustling to fix this.
@Remone Randolph , was the FHA amendatory clause signed?
Here is the portion from the amendatory clause required on all FHA loans that will allow you to get your deposit back if doesn't appraise.
"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....setting forth the appraised value of the property of not less than" $(purchase price)."
I do not know if there is a specific timeline for your state but you can contact the escrow agent and find out.
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