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Ray
Ray, Lawyer
Category: Legal
Satisfied Customers: 30137
Experience:  29 years in civil, probate, real estate, elder law
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I put an offer on a second/vacation home in Minnesota last

Customer Question

I put an offer on a second/vacation home in Minnesota last Sunday, July 24th. The purchase agreement has been signed via email and scanned copies. The home was listed for $125,000 and I got it for $120,000. Just today, I was searching the internet to see if the home I made an offer on was still listed for sale and.....two additional homes (just down the block from the property in question) showed up as being sold in May for $77,000 and $85,000. Both these homes are 1 year newer and have more square footage than the home I put an offer on. Needless to say, I am now quite shook up over the "difference" in the price I am to pay and the much lower price these other homes sold for. What should I do? Can I cancel the Purchase Agreement? Help!
Submitted: 3 years ago.
Category: Legal
Expert:  Ray replied 3 years ago.

RayAnswers :

Thanks for your question and good evening.

RayAnswers :

Are you financing the home here?

Customer :

In Minnesota? Yes

RayAnswers :

Well the house here is unlikely to appraise out for what you are going to finance here.If the house will not appraise for what you need to borrow that would be an out here.You can seek to claim your circumstances here have changed and see if they would keep your down payment and release you.

RayAnswers :

You can try here to seek your release--the seller controls this matter.And if the house doesn't appraise for what you need to borrow that is an out from the deal.In that case if they will not approve the loan you would be able to cancel the deal.

RayAnswers :

To me you may want to seek to cancel.I mean loosing your down payment here might be better than this deal.The house looks underwater here from the get go thats not a good way to start.

Customer :

In an appraisal do they take into consideration comparable sales such as the ones nearby for less?

RayAnswers :

Yes they surely do.You may also want to run the property with tax appraiser.They are pretty dead on these days so see what the value is on the tax rolls.

RayAnswers :

I sure would try to get out of this.Claim your situation has changed here see if you can get out of it.

Customer :

The property tax valuation is around $106,000 ....I looked this up on the internet sinci it's public information anyway.

RayAnswers :

Well you are underwater here from the get go.No way this appraises for what the you offered based on what you present.You are better off here giving them the earnest money if you have to.

Customer :

So, who do I contact first.....my realtor or my mortgage officer?

RayAnswers :

Start with realtor and then the mortgage officer.

RayAnswers :

I think you are better off getting out here.I wish you good luck

Customer :

I was going to put 20% down and end up with $96,000 to finance. Does this change the situation?

RayAnswers :

I still don't think this will appraise out here.I mean if you want the house and you intend to keep it many years you can hope it turns around.But the trend here is downward and that doesn't bode well at all.

Customer :

So, one more time....do I contact my realtor first and tell her I want to "cancel" and do I give her the real reason of the low comparable sales? Or do I make up some other reason?

RayAnswers :

I would be vague about the reason here.I think its best if you do it this way.I don't think you can barter down with a signed contract here.I think you walk regroup and find a cheaper property here in a few months.You can do much better .

Customer :

Am I able to just walk out of it? Won't there be some sort of penalty, besides losing my downpayment? Can the sellers sue me?

RayAnswers :

Look at the contract.I am betting it says they get the earnest money as liquidated damages.Your realtor can tell you exactly what you will have to pay to walk away.

Customer :

Thanks for your help. I feel better now...losing the downpayment is much cheaper than having to live in a home that I feel bad about because I didn't get a good deal. Have a good night.

RayAnswers :

You too and thanks again.If you can click accept it is much appreciated.

Expert:  Ray replied 3 years ago.
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Expert:  Ray replied 3 years ago.
Have a good evening and thanks for letting me help you.

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Ray
Ray
Lawyer
30137 Satisfied Customers
29 years in civil, probate, real estate, elder law