Anyone familiar with real estate law ?

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diymirage

diymirage

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Real short, qe are looking at buying a house, put in an offer and put down an Earnest Money Deposit

The offer was accepted but when the bank did the appraisal it came up short


We were not able to renegotiate a new deal and it the seller now told me he has an offer from someone else for 5K over my last offer


Here is my question "is he allowed to entertain other offers before signing the paperwork to release my EMD"

It seemed to me that EMD locked him in with me
 
Seller can entertain anything they want. Hopefully your offer was contingent... Have your Agent handle it. You do have one don't you?
 
** I'm not a lawyer nor a licensed realtor

Are you working with an agent or is this a FSBO?

A few issues here potentially:

Usually the appraisal is for the buyer and does not obligate the seller..it just means that the bank will only loan an amount up to the appraisal and it would be the buyer's responsibility to make up the difference.

Did your contract have a opt-out clause based upon appraisal?

Did the seller indicate they are taking back-up contracts?

Usually the deal isn't done until all negotiated contingencies are done. If there was a counter-offer following appraisal then the seller can decide not to accept the change and return the earnest money deposit as it should be held in escrow until closing and applied at that time.

State laws will give particular rules around handling of any deposits etc.
 
What does your contract say? “I have another offer” is a tool to get the buyer to complete the contract, even though the appraisal came back low. Although in todays market the seller very well may have another offer. Whether they have to return your deposit depends on the wording of your contract.
 
OldmanRick said:
Seller can entertain anything they want. Hopefully your offer was contingent... Have your Agent handle it. You do have one don't you?
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Yep, we sure do

However, that is where the rub lies

The appraisal came in 20K under our previous offer
So i told him i would pay what it was appraised at

He said he only accepted that if we paid our agent and i refused because that would leave me paying about 10K over what the house is worth

His other offer was for me to pay him the appraised value and not pay my agent


Needless to say, that's where I withdrew my offer all together
 
The "paying the agent" and "not paying the agent" is sketchy.

So the seller is not using an agent I take it?

Based upon the counter offer post-appraisal the seller can walk and does not have to negotiate further..so no, not locked in.

As @Slowswinger mentioned...I hope the contract gets you your cash back
 
I agree, all contingencies must be removed before the deal is done. When I sold real estate many years ago I always had a buyer put contingencies in the contract for:

Lending
Appraisal
Home Inspection

Since you can't come to a new price, I would think the contract would allow the seller to take other offers. Now, the seller should quickly produce the document to termination the contract and return your earnest money.

It's certainly more important that a buyer doesn't put an offer on two houses at the same time or they could be on the hook for two houses.
 
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66fyssh said:
I agree, all contingencies must be removed before the deal is done. When I sold real estate many years ago I always had the seller put contingencies in the contract for:

Lending
Appraisal
Home Inspection

Since you can't come to a new price, I would think the contract would allow the seller to take other offers. Now, the seller should quickly produce the document to termination the contract and return your earnest money.

It's certainly more important that a buyer doesn't put an offer on two houses at the same time or they could be on the hook for two houses.
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And if it's not in writing and signed by both parties it didn't happen.
 
It sounds like you are communicating directly with the owner??

Your agent should be the only person talking with the seller if it is a FSBO, or the sellers agent.
 
66fyssh said:
It sounds like you are communicating directly with the owner??

Your agent should be the only person talking with the seller if it is a FSBO, or the sellers agent.
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Yes to the above! I know the market is out of wack these days, but your deposit should be returned in a timely fashion and you need to continue your search. Don't get discouraged, there is deal out there somewhere. Good luck
 
We have two daughters in real estate, one in Maryland & one in Florida. Our Tampa girl puts up with this crap on a daily basis. Cash buyers from the northeast throw big cash offers around and the sellers always think they can get more & more. Tough job dealing with all that and helping the locals buy property.
 
WV64Signet said:
The "paying the agent" and "not paying the agent" is sketchy.

So the seller is not using an agent I take it?

Based upon the counter offer post-appraisal the seller can walk and does not have to negotiate further..so no, not locked in.

As @Slowswinger mentioned...I hope the contract gets you your cash back
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Nope, just one agent involved here, mine

We did have all the contingencies listed in the contract,, and since he is not about to produce a product of proper value,, I don't see an issue getting the money back


my only confusion is him being allowed to take offers from others while we are still at the table

I figured untill he signs the documents releasing our EMD he is still in negotiations with us,, and bound by that



66fyssh said:
It sounds like you are communicating directly with the owner??

Your agent should be the only person talking with the seller if it is a FSBO, or the sellers agent.
Click to expand...

Nope, it is all through our agent
The only time I talked to him was during the showing, I don't even have his contact info
 
My son in law just bought a house here in Michigan. The seller was accepting "back up offers" until the day of the close. As hot as the market is a lot of sketchy things happen. Good luck!
 
diymirage said:
We did have all the contingencies listed in the contract,, and since he is not about to produce a product of proper value,, I don't see an issue getting the money back
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Was one of the contingencies that the house did not appraise for the contract price? How is the deposit held or where is your money? Getting it back may be the difficult part if the seller sees things differently. Your agent should handle getting the deposit back for you, in my opinion.
 
Slowswinger said:
Was one of the contingencies that the house did not appraise for the contract price? How is the deposit held or where is your money? Getting it back may be the difficult part if the seller sees things differently. Your agent should handle getting the deposit back for you, in my opinion.
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yup. almost certain that was one of the contingencies (ill double check)

the money is held in escrow by my agent
and she is working on getting it back, im sure
 
diymirage said:
yup. almost certain that was one of the contingencies (ill double check)

the money is held in escrow by my agent
and she is working on getting it back, im sure
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If your agent is holding the deposit you should be in good shape. Welcome to the world of investing in property. It doesn’t get easier you just learn more each time.
 
70 Buster 340 said:
I think that's when he can accept any offers.
Laws vary by State and even at the City or County level.
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you're probably right (and i honestly think he is just yanking my chain)

but you know im not going to submt and offer on anything else untill i get that deposit back
 
If the appraisal is low, the Buyer has only one recourse. pay the difference, or the lender will deny the loan, the deal is dead. You have to be given the chance to cover the shortage. but, if you can't, the deal is dead. the seller can negotiate a new deal.

(I have been selling since 1993, over 1000 transactions)
 
Houses selling for more than appraisal value seems to be common in the last couple years. The market is so overheated that people have to do it just to get a house. You just have to decide how much you can afford & how bad you want it.

Property values are going up so fast that overpaying a little may not be all that bad. If you will be in it for a long time, then it may not matter all that much.

We finally bought another house after looking for a couple years this last summer. It worked out good for us. We thought the people who bought our old house overpaid. However, looking at Zillow, the house is valued 7 or 8% more than they paid for it 6 months ago.
 
Mike69cuda said:
Houses selling for more than appraisal value seems to be common in the last couple years. The market is so overheated that people have to do it just to get a house. You just have to decide how much you can afford & how bad you want it.

Property values are going up so fast that overpaying a little may not be all that bad. If you will be in it for a long time, then it may not matter all that much.

We finally bought another house after looking for a couple years this last summer. It worked out good for us. We thought the people who bought our old house overpaid. However, looking at Zillow, the house is valued 7 or 8% more than they paid for it 6 months ago.
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I tell people all the time, that the houses aren't worth more, the money is worth less. The cheaper the Interest rate, the higher the price goes.

The Govt is borrowing new, cheap money to pay off higher interest rate treasury notes. typical shell game,,,,Then they can borrow even more!
That is why the feds want to devalue the dollar.
 
oldmopardude said:
If the appraisal is low, the Buyer has only one recourse. pay the difference, or the lender will deny the loan, the deal is dead. You have to be given the chance to cover the shortage. but, if you can't, the deal is dead. the seller can negotiate a new deal.

(I have been selling since 1993, over 1000 transactions)
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I get all that, and 1 I don't want to pay the gap, and 2 I don't have the cash for it

BUT, untill he signs the paper releasing my deposit, I am tied to him

Only makes sense to me that would go both ways
 
diymirage said:
I get all that, and 1 I don't want to pay the gap, and 2 I don't have the cash for it

BUT, untill he signs the paper releasing my deposit, I am tied to him

Only makes sense to me that would go both ways
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he can't hold the earnest deposit, but if he does he also can't resell the house, as you two have a contract.
I recommend your agent tell his agent if he resells without a release, you can sue him for damages and harm, thus putting a cloud on his title. no title company will process it if they see a legal proceeding on the property.

It takes two people to initiate a contract, and two people to end it.
 
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