New to Real Estate · Auburn Hills, MI · Member since 2016 · 5 posts · 5 votes
So I saw a duplex on the market and put it under contract for 312k, I thought it was a good investment.
Fast forward, now the appraisal came out and was priced at $280k, after I did more research I realized that I was too optimistic about the rent I can get for that property. Now even with the apprisal price, I won't be able to get a good C on C return as I expected. My mistake of course.
So my question is can I back off the deal at this point without losing my deposit?
Developer · Youngstown, OH · Member since 2019 · 129 posts · 121 votes
4y
I would say that unless there are issues with the property that are major that came up on inspect, and you had an inspection contingency, probably not.
If the seller agrees to go down to the appraised amount , you're probably still on the hook. You overestimating the rents you could get is on you, not the seller. Meanwhile, you've kept it off the market for him when he probably could have sold it by now.
The EMD is made precisely so someone doesn't take the house off the market and then just change their mind willy nilly costing the seller time and money
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Can you get funding that is satisfactory to you for 280? The answer is "no", unless you were pre-approved. It you were P.A., then you would have to go to the lender that did that, and see if you still are.
What escape clauses do you have in the written agreement?
Developer · Youngstown, OH · Member since 2019 · 129 posts · 121 votes
4y
I would say that unless there are issues with the property that are major that came up on inspect, and you had an inspection contingency, probably not.
If the seller agrees to go down to the appraised amount , you're probably still on the hook. You overestimating the rents you could get is on you, not the seller. Meanwhile, you've kept it off the market for him when he probably could have sold it by now.
The EMD is made precisely so someone doesn't take the house off the market and then just change their mind willy nilly costing the seller time and money
Realtor · Washington, DC · Member since 2013 · 91 posts · 32 votes
4y
It all depends on exactly what language is in the financing and appraisal portion of the contract. Here in DC metro area there are 2-3 different kinds of contracts that are used and the language pertaining to each of these changes depending on the jurisdiction. Talk to your agent, and find that part of the contract. It should spell out exactly what happens in the event of a low appraisal, eg. "seller has x amount of days from the notice to lower the purchase price to the appraised value. if seller doesn't agree to lower price to appraised value, contract is void." best people to consult are your agent and an attorney - best of luck!