Appraisal comes back lower than asking, seller is not willing to return deposit
Investor · NJ · Member since 2023 · 13 posts · 14 votes
Appraisal comes back lower than asking, seller is not willing to return deposit
Most Popular Reply
Patrick DruryBusiness Member
Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes@Jinglei Shen
You'll need a signed mutual release from the seller before the title company will release those funds. In Ohio, EMD will stay with the title company or buyer broker (whichever it's deposited with) for 2 years, then it gets released back to the buyer if the parties can't come to an agreement
41 Replies
- 1ySasha MohammedPro MemberLender · Costa Mesa, CA · Member since 2018 · 337 posts · 245 votes
State by state is going to vary, but general rule: if you still had contingencies intact, you should have every right to exercise those contingencies. OH is an escrow state, so i would have your agent reach out to the escrow officer and let them know you are cancelling the escrow, and which contingency you are exercising (whether it be appraisal, loan, or otherwise)... and ask when you can expect your EMD back in full. Disclaimer that I am not licensed in OH to give you any formal advice but I don't believe the seller has any say in the matter here regarding your EMD... this is the literal point of having a third party middle-man (escrow) in the mix.
- Investor · NJ · Member since 2023 · 13 posts · 14 votes1y
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes1y
Quote from @Jinglei Shen:
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
Is this a FSBO or is the seller using an agent?
District Invest Group545 Reviews - Investor · NJ · Member since 2023 · 13 posts · 14 votes1y
Seller is a real estate agent, based in Ohio, he owns an LLC to flip house and invest in RE, this property is owned by this LLC.
Quote from @Russell Brazil:
Quote from @Jinglei Shen:
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
Is this a FSBO or is the seller using an agent?
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes1y
Quote from @Jinglei Shen:
Seller is a real estate agent, based in Ohio, he owns an LLC to flip house and invest in RE, this property is owned by this LLC.
Quote from @Russell Brazil:
Quote from @Jinglei Shen:
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
Is this a FSBO or is the seller using an agent?
Have your agent pressure their broker
District Invest Group545 Reviews Quote from @Jinglei Shen:
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
CA has the same rule about both parties signing to release funds, but the seller cannot sell the property without cancelling the contract. Even accepting first position offers can open the seller to being sued (never heard of it happening).
Verify that the seller cannot sell the property without the contract being released (both parties signing). If this is the case, your seller should want to release the Earnest Deposit. In addition, you can threaten that you will sign the release if it is done in the next 2 weeks otherwise you will not be signing it. In CA this
would hold the property in limbo.
In CA the buyer has a position of power due to the seller not being able to sell the property if it is under contract.
Good luck- Central Florida · Member since 2023 · 40 posts · 40 votes1y
Quote from @Dan H.:
Quote from @Jinglei Shen:
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
CA has the same rule about both parties signing to release funds, but the seller cannot sell the property without cancelling the contract. Even accepting first position offers can open the seller to being sued (never heard of it happening).
Verify that the seller cannot sell the property without the contract being released (both parties signing). If this is the case, your seller should want to release the Earnest Deposit. In addition, you can threaten that you will sign the release if it is done in the next 2 weeks otherwise you will not be signing it. In CA this
would hold the property in limbo.
In CA the buyer has a position of power due to the seller not being able to sell the property if it is under contract.
Good luck - 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Dan H.:
Quote from @Jinglei Shen:
Hi Sasha,
Thank you for your response. My agent has found the financing contingency states that if financing is not obtained due to a low appraisal, the contract is void, the EMD must be returned to the buyer. The title company replied that when a contract is cancelled, they do not assume anything for the same reason. what they need is a signed agreement between seller and buyer telling them who gets the EMD. if there is no agreement, they will continue to hold funds until there is a mutual signed agreement. Seller is not willing to sign the agreement, he is being very difficult now.
Your thought is appreciated.
CA has the same rule about both parties signing to release funds, but the seller cannot sell the property without cancelling the contract. Even accepting first position offers can open the seller to being sued (never heard of it happening).
Verify that the seller cannot sell the property without the contract being released (both parties signing). If this is the case, your seller should want to release the Earnest Deposit. In addition, you can threaten that you will sign the release if it is done in the next 2 weeks otherwise you will not be signing it. In CA this
would hold the property in limbo.
In CA the buyer has a position of power due to the seller not being able to sell the property if it is under contract.
Good luck
Dan just a minor correction the seller can sell they just cant use the same title / escrow company were the deposit is they simply have to go to another title/escrow company.. the buyer would have to sue and put a lis pendense to stop a sale but who is going to do that over a EM deposit that is probably 2k or less.. It sucks but thats how EM deposits work in virtually all markets.. now one thing I personally do as a buyer is I will send in money but NOT EM I will send in money as part of the purchase price and Zero Em that way I can recall the money at any time since its not EM.. - Member since 2018 · 1k+ posts · 1k+ votes1y
Quote from @Jay Hinrichs:
1. Surprised you get sellers to agree to that.
2. if sold, the holder of the earnest money should give the money back without hesitation. The contract is now impossible to perform and by honoring a different contract that excludes your contract, the seller has cancelled your contract by his acts. No writing needed. - 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @John Clark:
Quote from @Jay Hinrichs:
1. Surprised you get sellers to agree to that.
2. if sold, the holder of the earnest money should give the money back without hesitation. The contract is now impossible to perform and by honoring a different contract that excludes your contract, the seller has cancelled your contract by his acts. No writing needed.
more common than you think lets say I am buying a 500k prop and putting 20% down I might put 50k down payment into escrow but NO EM.. If I want to terminate I just ask for my money back.. they cant hold it since it not Em.. same as when I am funding deals for others.. we might send in 100% of the purchase price to escrow but if something comes up I just cancel and get it all back.. Now I agree most wont think of this or understand it.. But thats how it works. once you denote it as EM your stuck. And mutual instructions are needed to release it.
- Investor · NJ · Member since 2023 · 13 posts · 14 votes1y
Seller is a real estate agent, he owns a LLC to flip house and invest in real estate, the property is sold under name of LLC.
- 1yGreg ParkerBusiness MemberRealtor, Contractor, Property Manager · Montgomery AL and Kowaliga, AL · Member since 2017 · 669 posts · 536 votes
I suppose it depends on the amount of the EM. If you are going to lose $1,000, then lessen learned about having precise contingencies and due diligence dates. Let them keep the money but let eveyone involved know they have forfieted a lifetime of RE deals with you over a few bucks. If it is several thousand, I would want to get it back. Each state will have procedures in place on who will mediate an EM dispute, sometimes a probate judge. Your agent will know the procedures. Normally, when the listing broker realizes it is going to court, they will pay up before it gets that far.
MGM Property Pros LLC- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Greg Parker:
I suppose it depends on the amount of the EM. If you are going to lose $1,000, then lessen learned about having precise contingencies and due diligence dates. Let them keep the money but let eveyone involved know they have forfieted a lifetime of RE deals with you over a few bucks. If it is several thousand, I would want to get it back. Each state will have procedures in place on who will mediate an EM dispute, sometimes a probate judge. Your agent will know the procedures. Normally, when the listing broker realizes it is going to court, they will pay up before it gets that far.
brokers are not going to pay the EM out of their pocket .. that is not going to happen .. as stated above EM deposited into an escrow can only be released upon mutual agreement signed by both buyer and seller with instructions where to send the money.. Or as stated it just stays frozen for a period of time. But no Brokers are not going to pay it.. They can try to pressure the seller for sure though.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
Did you have a financing contingency? What is their broker saying? Can you add more insight to the situation of how many people are involved
7e investments53 Reviews- Investor · NJ · Member since 2023 · 13 posts · 14 votes1y
My contract has a financing contingency which states that if financing is not obtained due to low appraisal, the contract is void and the EMD must be returned to the buyer.
This deal was sourced off market by my real estate agent(recommended by bigger pocket), seller uses a LLC to sign contract, I later found out online that LLC was owned by an real estate agent who seems to work for the same real estate broker as my agent, I don't know how well they know each other, the mortgage broker I use is recommend by my real estate agent, the lender is a local bank in ohio. when I review my appraisal, mortgage broker seems to know the seller ...
one strange thing I notice is, but I am not sure if this is a standard practice in ohio
I found out my initial appraisal result and revaluation result through my real estate agent, not my mortgage broker. which seems strange to me at the time but I did not question myself hard thinking they are doing their best to close this deal quick.
When my agent called me to discuss the initial appraisal result, I told him to share the result with the seller, he said the seller already knew. He did not explain how seller knew, he did not admit he tell the seller before getting my permission or the mortgage broker share with the seller without having my consensus.
the title company ignores my finance contingency, all they want is an agreement between seller and buyer stating who gets EMD. as explained by a real estate agent in this post, it seems to be a standard practice in ohio.
I have texted my mortgage broker, he is surprise that seller can hold on my EMD, he always thought EMD goes back to buyer if property does not appraise,
My mortgage broker is saying he is working with my real estate agent to having the seller sign release form.
My real estate agent gave me one call yesterday gave me a heads up the seller is being difficult using all kind of excuse such as inspection seems nothing to do with financing situation, he is trying his best to get my money back, he has not shared any comment from their broker.
Quote from @Chris Seveney:
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
Did you have a financing contingency? What is their broker saying? Can you add more insight to the situation of how many people are involved
- 1yPatrick DruryBusiness MemberReal Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
@Jinglei Shen
You'll need a signed mutual release from the seller before the title company will release those funds. In Ohio, EMD will stay with the title company or buyer broker (whichever it's deposited with) for 2 years, then it gets released back to the buyer if the parties can't come to an agreement- Member since 2023 · 243 posts · 199 votes1y
Quote from @Patrick Drury:
@Jinglei Shen
You'll need a signed mutual release from the seller before the title company will release those funds. In Ohio, EMD will stay with the title company or buyer broker (whichever it's deposited with) for 2 years, then it gets released back to the buyer if the parties can't come to an agreement
Section 4735.24 of the Ohio Revised Code:(B) A purchase agreement may provide that in the event of a dispute regarding the disbursement of the earnest money, the broker will return the money to the purchaser without notice to the parties unless, within two years from the date the earnest money was deposited in the broker's trust or special account, the broker has received one of the following:
(1) Written instructions signed by both parties specifying how the money is to be disbursed;
(2) Written notice that a court action to resolve the dispute has been filed.
(C)(1) If the parties dispute the disbursement of the earnest money and the purchase agreement contains the provision described in division (B) of this section, not later than the first day of September following the two year anniversary date of the deposit of the earnest money in the broker's account, the broker shall return the earnest money to the purchaser unless the parties provided the broker with written instructions or a notice of a court action as described in division (B) of this section.
- 1yDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 993 posts · 647 votes
Good morning @Jinglei Shen! I had the same occurence, however I was the Realtor for the seller. In PA, where I am licensed, you must choose whether or not you want to include an appraisal contingency as a buyer. And you must set the pricing in the appraisal contingency. Some will use the mortgage amount, and some will use the sales price. I usually will use the sales price. This means that the appraisal must meet the full sales price. And if it does not, the buyer gets to leave the contract and retain their deposits. Look at your AOS and see what it says. I truly hope this works out for you!
Spark Rental Co-Investing Club582 Reviews - 1yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
What @Patrick Drury said is how I understand how it works. Some of my clients have received their money back after two years. If it's an agent, you can contact the broker and ask him to investigate.
- Investor · NJ · Member since 2023 · 13 posts · 14 votes1y
For your clients who receive their money back after two years, does it mean the contract was active for 2 years, seller lock in that contract can not sell the property to any party during two years?
Quote from @Remington Lyman:
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
What @Patrick Drury said is how I understand how it works. Some of my clients have received their money back after two years. If it's an agent, you can contact the broker and ask him to investigate.
- 1yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Jinglei Shen:
For your clients who receive their money back after two years, does it mean the contract was active for 2 years, seller lock in that contract can not sell the property to any party during two years?
Quote from @Remington Lyman:
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
What @Patrick Drury said is how I understand how it works. Some of my clients have received their money back after two years. If it's an agent, you can contact the broker and ask him to investigate.
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- 1yGreg ParkerBusiness MemberRealtor, Contractor, Property Manager · Montgomery AL and Kowaliga, AL · Member since 2017 · 669 posts · 536 votes
I have and I will. If I have a good client that buys multiple houses, I will gladly throw some money in to keep them happy. Move on to the next deal. Always do the right thing and it will come back to you tenfold.
MGM Property Pros LLC- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesyour in the minority in all my 50 years of selling RE I am not sure i have ever seen an agent do this.. granted agents will do other things like cut commish etc.. but I cant recall once were an agent paid the EM deposit that was due back to a buyer B/C seller would not release it.
Quote from @Greg Parker:
I have and I will. If I have a good client that buys multiple houses, I will gladly throw some money in to keep them happy. Move on to the next deal. Always do the right thing and it will come back to you tenfold.
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes1y
As a few mentioned have your agent contact their broker and let them know. That typically lights a fire under the seller. The listing agent needs to make sure her client understands they have zero leg to stand on. Don't back down and keep on them :)
If you waived the contingency then it'd be a different story.
- Real Estate Broker · Cleveland, OH · Member since 2023 · 49 posts · 32 votes1y
Can't entirely know what your contract says as it relates to the earnest money, but I'd put some pressure on the listing agent and listing brokerage. If it's also an agent/owner, I think a call to listing broker will get things sorted out quickly.
https://codes.ohio.gov/ohio-revised-code/chapter-4735 (Section 4735.24)
Good luck!
- Real Estate Broker · Cleveland, OH · Member since 2023 · 49 posts · 32 votes1y
Also, here's my "cheat sheet" for appraisals and reconsiderations of value (ROV).
BEFORE THE APPRAISER ARRIVES:
1. Multiple Offers or Over Asking Price? If Yes: Send the top three offers to the appraiser before they visit. This can demonstrate market demand for your property.
2. Provide Comparable Sales: Provide the appraiser with your selection of the three best comparable sales. Just include the address, sales price, and date sold.IF APPRAISED VALUE IS LOWER THAN ANTICIPATED:
You may be able to request a Reconsideration of Value (ROV) from the lender. I suggest reviewing the appraisal for accuracy and here are a few key points to consider:
• Stronger Comparable Sales: Are there better comparable sales that should’ve been used? This is your best opportunity for a successful reconsideration of value.
• Clerical Errors: Are the square footages, bedrooms, bathrooms, and lot sizes accurately reflected? For the subject property and comparable sales?
• Off-Market Sales: Were any off-market transactions missed? Check county auditor sites or Realist’s public records for this data.
• Adverse Features: Do any of the comps have issues not considered in the appraisal, such as proximity to a high-traffic road, sewer plant, or power lines?
• Recent Sales: Have any new, more relevant comparable sales occurred between the date of appraiser’s visit and now? If so, they may still consider including them.
• Sales Recency: Did any of the comparable sales close more than three months ago? A time adjustment may be needed for accurate valuation.
• Arm’s Length Sales: Were the comparable sales used in the appraisal arms-length transactions? Beware of comps that might skew the value, like those from multiple properties sold simultaneously, or seller-financed deals, which aren't appropriate for comparison.
• Geographical Competence: Is the appraiser familiar with the area? If they're located two or more counties away, their expertise in the local market may be limited. The lender will likely ask how many appraisals they’ve completed in the area of the subject property. If there are too few, the appraisal may be deemed deficient.And as a last-ditch strategy (and assuming the Buyer has a Conventional/DSCR loan), the Buyer can decide to work with a different lender and the new lender will order their own appraisal.
- Central Florida · Member since 2023 · 40 posts · 40 votes1y
There is a book by Oren Klaff called Pitch anything … I would use frame control to settle this matter . I would write this response to sellers agent and cc broker if you can.
Hi [Agent's Name],
I wanted to reach out directly regarding the escrow deposit and the status of the listing. As you know, the appraisal came in 14% lower, and my client's lender cannot finance based on that valuation. Given the circumstances, it's clear that returning the EMD is the appropriate course of action.
However, I understand the seller is hesitant to release the deposit. That’s their choice, but here’s the reality: until the escrow is resolved, this home cannot be placed back on the market or shown to new buyers per MLS rules. If the listing goes active again or showings begin without resolving this, I'll have no choice but to escalate the issue. That includes notifying MLS compliance and reaching out to your broker, who will have three days to correct the situation.
I'm sure we both want to avoid unnecessary delays and headaches. The cleanest and most professional path forward is to have the EMD released so everyone can move on. Let me know how you'd like to proceed—I'd rather work with you than escalate, but I'll do what's necessary to protect my client's interests.
Looking forward to your prompt response.
Best,
Buyer agent - Member since 2021 · 124 posts · 87 votes1y
If you don’t sign the release or agreement, the seller can’t sell the house until it is resolved. The time is on your side unless the seller is planning to not sell the property since now he knows that he needs to find a cash buyer to sell the property at the asking price.
- Real Estate Broker · Cleveland, OH · Member since 2023 · 49 posts · 32 votes1y
Quote from @Laura Winters:
If you don’t sign the release or agreement, the seller can’t sell the house until it is resolved. The time is on your side unless the seller is planning to not sell the property since now he knows that he needs to find a cash buyer to sell the property at the asking price.
I don't believe that's correct. A termination and a mutual release for earnest money are two different things. It sounds like the contract terminated due to an appraisal contingency that the parties couldn't renegotiate. Just because both parties are disputing who gets the earnest money shouldn't prohibit a Seller from putting their home back on the market.
- Member since 2021 · 124 posts · 87 votes1y
Quote from @Dalton Summers:
Quote from @Laura Winters:
If you don’t sign the release or agreement, the seller can’t sell the house until it is resolved. The time is on your side unless the seller is planning to not sell the property since now he knows that he needs to find a cash buyer to sell the property at the asking price.
I don't believe that's correct. A termination and a mutual release for earnest money are two different things. It sounds like the contract terminated due to an appraisal contingency that the parties couldn't renegotiate. Just because both parties are disputing who gets the earnest money shouldn't prohibit a Seller from putting their home back on the market.
I think Dan H explained it more clearly in the comment. You can’t sell the property normally if you have an issue hanging like this. If the seller signed the release, title company would not have a problem sending the deposit back. Sounds like the seller is refusing to sign the release and he can’t sell the house if he has an existing contract.
- 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
I would reach out to the realtor's broker and ask for them to investigate and look further into this. But yes, you would need a mutual release signed by both parties or you would have to wait 2 years to get your EMD back from the title company unfortunately. There's no way around that!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - Real Estate Broker · Cleveland, OH · Member since 2023 · 49 posts · 32 votes1y
@Laura Winters No offense to you or Dan (from California), but we're talking about Ohio real estate law. If I've got this wrong, I'd appreciate it if you could point me to the section of Ohio Revised Code or law that says a Seller can't sell the property when there's an earnest money dispute.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Dalton Summers:
@Laura Winters No offense to you or Dan (from California), but we're talking about Ohio real estate law. If I've got this wrong, I'd appreciate it if you could point me to the section of Ohio Revised Code or law that says a Seller can't sell the property when there's an earnest money dispute.
there is no law . its just that the title company they are using now wont close it just have to move to a different title company.. simple as that. - Member since 2021 · 124 posts · 87 votes1y
Quote from @Dalton Summers:
@Laura Winters No offense to you or Dan (from California), but we're talking about Ohio real estate law. If I've got this wrong, I'd appreciate it if you could point me to the section of Ohio Revised Code or law that says a Seller can't sell the property when there's an earnest money dispute.
There is no law for this specific matter, just like thousands of other things that people don't do even though there is no law. I guess the seller technically can sell it just like you can sell pretty much anything.
It is a matter of whether the seller can find a realtor willing to work on the property with an active contract/issue, and find a buyer willing to buy the property knowing this ongoing issue. Can the seller not disclose this matter? Absolutely. Is it ethical and make any sense? No, what if the writter put a lien or court claim on the house while the sale is going through? There are just so many problems that can happen for a few thousand dollars of EM. If I am buying a house and find out later that things are going on that the seller didn't tell me, I am going to bring my A+ team to comb through every single inch before buying it. Even after all that, will the lender approve this? I am not sure since I am not an FHA lender.Since the whole thing started because of the appraisal value, I believe the deal is not even amazing, that buyers will ignore strings attached. Real Estate is not just about code and regulations. It existed way before any of the laws or regulations existed, and it will still exist even after all the laws are removed.
- Member since 2018 · 1k+ posts · 1k+ votes1y
I understand your concept, but I would refuse your offer precisely because it can be 100% withdrawn, so you might as well be a wholesaler with no skin in the game. Kant and sophistry and all that
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Quote from @Jinglei Shen:
I was in a contract for a duplex, the appraisal come back materially lower than asking price, 14% cheaper, the seller made my agent to challenge the appraisal by submitting a set of comps at and beyond asking price in the same area, we ask my lender to revalue, the revaluation result came back, same price as initial appraisal. The seller is not willing to lower the price, so I decide to walk out the deal. The seller is being difficult, first said only return half my deposit, now not willing to return whole deposit using me passing the inspection date as excuse, my agent is fighting for me and said to the seller it is about financing bank is not lending at the asking price, the contract has general terms about financing, it is a standard contract my agent offered, my agent told me he is going to call the title company, hopefully title to return my deposit. It is my first out of state investing deal, Ohio is one of state does not need lawyer to review contract, so I have not hired a lawyer to review my contract.
Any other investor has experience this before and what are the course of actions I can take to have my deposit back?
Have your attorney file a lis pendens on the property. No title co will insure with a lis pendens, and no buyer in his right mind will buy. It's called playing HARDBALL
- Member since 2018 · 1k+ posts · 1k+ votes1y
Quote from @Don Konipol:
Have your attorney file a lis pendens on the property. No title co will insure with a lis pendens, and no buyer in his right mind will buy. It's called playing HARDBALL
A lis pendens requires that a lawsuit be filed first, since the lis pendens is notice of the suit.
Also, if the buyer is terminating the contract, then title to the property is not in play, so no lis pendens is possible. If the buyer sues to get his money back and gets a judgment, then the buyer can record a judgment lien against the property, but not before.
From the postings, I see that there is a possibility that the buyer has defaulted on the contract. In that case, the seller is right to keep the money, depending on the terms of the K.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Quote from @John Clark:
Quote from @Don Konipol:
Have your attorney file a lis pendens on the property. No title co will insure with a lis pendens, and no buyer in his right mind will buy. It's called playing HARDBALL
A lis pendens requires that a lawsuit be filed first, since the lis pendens is notice of the suit.
Also, if the buyer is terminating the contract, then title to the property is not in play, so no lis pendens is possible. If the buyer sues to get his money back and gets a judgment, then the buyer can record a judgment lien against the property, but not before.
From the postings, I see that there is a possibility that the buyer has defaulted on the contract. In that case, the seller is right to keep the money, depending on the terms of the K.
I stand corrected!
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes1y
Buyer and seller agree on a price . Property appraises for less than agreed price , Lender wont lend as much . So buyer brings more money to the table .
Who sets the price for the property ? Buyer ? Seller ? or appraiser ? Agent ?
- Flipper/Rehabber · MI · Member since 2023 · 65 posts · 14 votes1y
Financing contingencies typically allow buyers to walk if the bank won’t lend at the contract price, making you entitled to a full deposit refund. Since the revaluation confirmed the lower appraisal, your financing clause should apply. Have your agent push the title company to release the deposit. If the seller refuses, a demand letter from an attorney can be effective. If that fails, consider filing a complaint with the Ohio Real Estate Commission or taking the matter to small claims court. You may also want legal review for future out-of-state deals.
- 1yBen FernandezBusiness MemberRealtor · Lancaster, PA · Member since 2025 · 169 posts · 97 votes
Depends on your contingencies expressed in the contract and their expiration dates.
If you inspection contingency expired first, then the appraisal-financing contingency, and you defaulted, the seller is correct.
If the appraisal- financing contingency expired first, before your inspection contingency, and you made the seller aware before expiration, and an addendum wasn't completed to extend the financing contingency period due to the challenging of the appraisal, you are correct.
If they both expired at the same time, the seller is correct - in reference to you defaulting.
You all probably should have done a formal termination of the AOS once the financing contingency failed. But you'll need an attorney to clarify.
All boils down to the terms specified in the AOS and you alls performance.
All the talk about returning a portion doesn't sound typical. But if you're the party that defaulted, you're lucky that they'd consider returning anything. You really need to determine your position based upon the terms of the AOS and who did and who did not perform within compliance.
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