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Legal rights when appraisal falls short?

Posted on: 06th Sep, 2007 05:43 am
I've got an offer on a home for $130,000. the seller accepted it and I'm just waiting for appraisal. It will cost around $12000 to replace carpet, paint walls and put in the yard. But I'm concerned on that the house might appraise $10,000 – 12000 less than the offer. If there isn't any statement as "offer contingent upon appraisal", and the selle5r has accepted the bid, do I have the legal right to break up the contract if the appraisal falls short?
Don't think it's that easy but you can request the seller.
Posted on: 06th Sep, 2007 05:45 am
Jeans, you need to contact an attorney & show the contract you had with the seller. He would be able to tell you if it can be cancelled based on the appraisal value. There can be specific details of your contract that we do not know & those can make the contract enforceable upon you.

Miller
Posted on: 06th Sep, 2007 03:09 pm
"do I have the legal right to break up the contract if the appraisal falls short?"

But why do you want appraisal to be equal to the offer price of $130k? What are the negatives for if appraisal falls short?
Posted on: 06th Sep, 2007 03:45 pm
That's because i need the loan amount to be around $130K, as it is the offer price. The appraisal will determine the loan amount and that's the reason i'm worried that if it falls short then it may be worth breaking the contract.
Posted on: 07th Sep, 2007 03:15 am
Hi Jeans,

Welcome to our community forums.

If there is an offer on contingency mentioned in your contract, then if you cannot get a loan there's the chance to break the contract with the seller. Now, you may not get a loan if the appraisal falls short of the offer. This is because the loan amount is based on the appraised value of your home. In that case, the contingency will allow you to look for another home and sign a deal with a different seller.

Regards,

Jessica.
Posted on: 09th Sep, 2007 08:39 am
Did you right any contigencies for inspection or lender approval. Even if in the worst case scenario what does the seller really have for choices. Sue you, keeping there house off the market longer, in hopes of getting what they want. If the house isn't worth 130k then they have it on the market for too much and just need to face the facts.

Is this your contract? You should always put in an inspection contigency. I have never seen a perfectly clean inspection report and this is also a good topic for negotiating final price.
Posted on: 09th Sep, 2007 01:56 pm
Oh no, i just don't have something as contingency mentioned in the contract, so what do i do?
Posted on: 10th Sep, 2007 05:16 am
What exactly does it say minus the personal info? If you wrote it as a cash deal then that is a problem. The only positive is that most people regardless of situation don't want to go to court.

You need to address the issue as soon as possible and just be honest. If you don't have the money you don't have it and the sellers probably need and want to move on.

So the moral of the story is if you wrote a cash deal for $130,000 no matter what the appraisal says that is what you owe. It is your responsibility to know the market that you are investing in. It is not uncommon for someone who really wants a house and plans on keeping it a long time to write a contract for more than the house is worth. As they are thinking in terms of value 10-30 years from now.

So no, you have no legal right to break contract but the sellers may or may not want to pursue you.

I am not an attorney and can't offer legal advice. If the sellers do pursue you GET AN ATTORNEY immediately. As in most states they can collect if you have it.
Posted on: 10th Sep, 2007 10:27 am
Hi Jeans,

If there is an offer of contingency upon appraisal, then only you can violate or alter the contract with the seller in case the appraisal falls short.

I agree with Livinginnky that if you break the contract without any contingency, then the seller can sue you and collect money from you.
Posted on: 11th Sep, 2007 02:39 am
Still, why offer more than a home is worth? Just because you really want that house, doesn't mean the seller doesn't REALLY want to sell. They should be more than open to sell it for fair market value, especially in todays market.

If the appraisal comes in low, use it as a negiotation tool to get it at a better price. If you really want a house and plan to live in it for many years that is fine, but 10-12k is 10-12k either way you look at it.
Posted on: 27th Sep, 2007 02:31 pm
Your purchase contract should have loan contingency's where if you can't get a loan the contract is canceled. If the property won't appraise then you can't get a loan and there you have it the contract is void.
Posted on: 28th Sep, 2007 01:13 pm
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