Earnest money refund

[Victor Gary]

Hello, I was trying to buy a property and everything’s fine until I got the appraisal report. The appraised value is lower than what the lender expected, so the lender lower the loan amount from 80% (which is on the purchase agreement) to 70%.

So my question is if I cancel the deal, would I get my deposit back because I can’t get 80% of the loan?

Thanks

[Russell Brazil]

Do you have an appraisal contingency in the contract? If you do, enact that and you should get your deposit back.

If you do not have an appraisal contingency, but only a financing contingency, then you need to make up that 10% difference if you have it. Does not matter if it is funds you do not want to use, if you have the funds, you have to make up the difference. If you do not have any ability to make up the 10%, then your financing contingency may protect you.

It is very important to understand that the contingencies for an appraisal and financing are two completely different things.