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Richard
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 46194
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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I found a house in Broward County

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I found a house in Broward County I was interested in purchasing. I asked my realtor if I needed an appraisal. She stated it was not necessary because I was paying cash. I applied for a VA loan and the appraisal came in at $345,000 versus the accepted offer of $565,000. The contract called for a non-refundable "good faith" money of $56,500. Is there any way I can cancel the contract and receive the $56,500 back? Should the realtor better represented my interest by agreeing to have an appraisal? I feel she is so anxious to make a sale that my best interests were not served. XXX XXX

Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.


Good morning. Are there any contingencies in your contract..such as an inspection contingency? a financing contingency? Are there any issues with the house that caused the appraisal to be so much less than the asking price? Were you originally paying cash and then decided to borrow the money? Thanks.
Customer: replied 1 year ago.

There was an inspection contingency in the contract but it has expired. We do not understand why the appraisal was so low. There were no comparable sales in the immediate neighborhood and the appraiser did not use the comps he asked my realtor to provide. He asked her to provide comps of other nearby golf course communities but then did not use them. This community is primarily condos with a smaller number of single family homes. I was planning to pay cash when my house here in Md. sold but it has not sold yet so I need a loan as a back-up. Quicken loans has asked for another appraisal but I would have to use conventional financing if it comes in higher. My problem is coming up with the $171,000 at closing (the difference between the appraised amount and therefore the VA loan and the selling price).

Expert:  Richard replied 1 year ago.
Thanks. This is going to be difficult, because it seems as if the real issue is the appraiser. There are so many incompetent appraisers; you always have to find an appraiser that is accustomed to dealing in the area in which the designated property is located. The real question here is whether the house is only worth what the appraiser states or whether the appraiser erred. If the appraiser is basically incompetent, it would not be the seller's fault; rather, you would want to either get another appraiser who better understands the area and/or re-educate the existing appraiser so that he/she can amend his appraisal. You might let him know that if he has erred and doesn't correct it, you will be filing a negligence suit against him for your loss. If the appraiser is correct and the property simply isn't worth the contract price, you'll have to be very proactive against the seller and realtor by putting them on the defensive by claiming a default on their end and to raise the stakes on them. The best approach here would be based on their duty to disclose. They are both obligated to disclose anything they knows or
should have known that a reasonable buyer would consider material in making the
decision whether or not to buy the property. You want to take the position that they should know there was a disconnect between the price and the value and was therefore something
that should have been disclosed. You should send
them a certified, return receipt requested letter detailing the situation and demanding that seller allow you to terminate and return your deposit in total within a short specified period of time. You will want to inform them that if your demand is not timely complied with, you will have no choice but to file a suit against
them for damages. You will want to make sure to specifically mention that you will be filing this claim not only as a breach of contract case, but also as deceptive trade
practice and fraud actions, which will entitle you not only to actual damages, but also an
additional amount equal to multiple times that as punitive damages. That should
provide plenty of incentive to comply with your demands; but, if it does not,
file the suit. This is not a slam dunk for you in any way, but given your contract and your facts, you have to put them on the defensive and allege they are in default which would negate the non-refundable nature of the deposit.



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Expert:  Richard replied 1 year ago.
Hi there. This question popped back up on my screen. Did you have a follow up? If so, I'll be happy to address it. Thank you!
Customer: replied 1 year ago.


I feel my realtor was not looking out for my interests. She discouraged me from putting in a contingency to sell my home because "the seller will probably not accept this and sell the house to someone else." This is in addition to replying to my question about an appraisal that I didn't need one because it is a cash sale.


 


My question is: Would it be of benefit for me to file a grievance with her firm indicating I do not feel she represented my interests by not protecting me from a low appraisal? Also, would it be of benefit to file a complaint with the Fla. Board of Realtors?


 


I would still be interested in buying the house if my house sells. It is on the market for &745,000 and we do not have any mortgage or liabilities. Also, if the appraisal were higher I would not have a problem coming up with the additional money needed to close. I have put $56,500 on deposit and still need to come up with $171,000 to close because the appraisal was for $345,000 and the sale is $565,000.

Expert:  Richard replied 1 year ago.
Thanks for following up. I would file a grievance with both her broker and the state board of realtors. She clearly was looking out for her commission rather than your best interests...there should have been a financing and an appraisal contingency.
Customer: replied 1 year ago.


Thank you so much. I am very relieved and now feel I know the right course of action to take. Wonderful advice. Steve

Expert:  Richard replied 1 year ago.
You're very welcome..it's my pleasure to help!
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 46194
Experience: 32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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