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Barrister
Barrister, Lawyer
Category: Real Estate Law
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Experience:  14 years real estate, Realtor. Landlord 24+ years
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I am the buyer and have a real estate contract for 431,000.

Resolved Question:

I am the buyer and have a real estate contract for 431,000. The appraisal came in at $410,000. today is the "removal of contingencies" date and I have an appraisal contingency (California standard form). Do I have to cancel my contract today to be protected by this appraisal contingency?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Barrister replied 1 year ago.
Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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Do I have to cancel my contract today to be protected by this appraisal contingency?
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If the appraisal contingency is one of the ones that expires today, then yes, you would have to cancel today. But if it is just the inspection contingency that expires, the answer would be no.
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But to be on the safe side, if it were me, I would go ahead and cancel, in writing, and then submit a completely new offer at $410 if I was still interested in the property. That way you are completely protected and can't possibly lose any earnest money due to a technicality.
.
.
Thanks
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 24563
Experience: 14 years real estate, Realtor. Landlord 24+ years
Barrister and 11 other Real Estate Law Specialists are ready to help you
Customer: replied 1 year ago.

Are you a Real Estate Attorney in California? All of the Realtors involved say, "You submit the removal of contingencies and check the boxes saying "I do not remove [x] appraisal or [x] loan contingencies," and then submit that to the seller. The seller may issue a "demand to perform" with the removal of contingencies, and if they say that they don't want to lower the price, then we cancel. But as of today, the seller's agent HAS received the removal of contingencies (as noted) but the seller still has not responded on whether they are willing to negotiate on the price.


 


If we cancel today, pretty much we end the deal.

Expert:  Barrister replied 1 year ago.
Sorry for my confusion, I thought you meant that you had already completed the release form previously and it was going to be effective today... And no, I am not currently in CA.
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But if you are talking about the CA Assn of Realtors Form CR, then yes, it you are just submitting it today, you can check the boxes that state you are only removing certain ones or the box that states you are removing all of them except the loan and appraisal contingency. (assuming you have a loan contingency as well)
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Thanks
Barrister
Customer: replied 1 year ago.

Thank you. So, back to my original question. If I submit this CR form and refuse to remove the loan or appraisal contingencies, can I still cancel the contract in a few days if the seller refuses to agree to a new lower price (or whatever, we don't agree) and I want to invoke the appraisal contingency to cancel the contract. Am I liable and can I lose my earnest money because I did not A) remove the appraisal contingency or B) cancel the contract?

Expert:  Barrister replied 1 year ago.
If I submit this CR form and refuse to remove the loan or appraisal contingencies, can I still cancel the contract in a few days if the seller refuses to agree to a new lower price (or whatever, we don't agree) and I want to invoke the appraisal contingency to cancel the contract.
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Yes, that is the entire purpose of refusing to release the appraisal and loan contingencies....to ensure that you aren't paying over appraised price and that you are actually able to obtain financing for the purchase.
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Am I liable and can I lose my earnest money because I did not A) remove the appraisal contingency or B) cancel the contract?
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No, by preserving the appraisal contingency, this is essentially an insurance policy that gives you the option to later cancel the contract if the seller won't agree to a price reduction down to appraised value.
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So by refusing to release the appraisal and loan contingencies, you are protecting yourself and preserving your options to terminate the contract. If you released them, then you are stuck whether it appraises or whether you can get a loan or not....
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Thanks
Barrister

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