True story - except for the actual values. I was the listing agent of a home that went under contract for $250,000. An inspection was done and the buyers presented their repair requests. My sellers made the necessary repairs and now we were waiting on the appraisal. Everything up to this point had checked out with both parties (buyers and sellers) and all we needed was the appraisal on the home. In the meantime, another agent wanted to put in a back-up offer but my sellers said no. After-all, we were practically ready to close. Well, the appraisal came back at $242,000. The buyers asked if we were ready to sell at $242,000, My sellers said no and after a few days the buyer came back and offered $246,000 and would pay the difference between the appraised value ($242,000) and the new offer ($246,000). Again, my sellers said no because the comps in their neighborhood proved that the AVERAGE sales price was $250,000 and we had one of the best homes in the neighborhood....by far! We suggested either; (a) buyer get another appraisal, (b) buyer come up to the original $250,000 agreed upon price or (c) move on to the next house. So, the buyers said we are going to move on. Now we are waiting on the Release Of Contract and Earnest Money form to be signed by the buyers and given to us. As we were waiting, I contacted the buyer's agent who had offered the back-up offer a few weeks prior and explained to her what had happened. Fortunately, she said that her client was ready to buy and would present a new offer to us right away. She did with the same purchase price of $250,000. The only difference is that now we had to wait a couple of extra weeks to close. Then I get a call from the buyer's agent of the first offer and he tells me that his clients are prepared to move forward and will agree to the original terms and the $250,000 purchase price. Let me remind you at this point that the house only appraised for $242,000. They were willing to pay the $8,000 difference to my sellers at closing. I contacted my sellers and they said NO. We have had it with them, they have dragged things out with nearly every single issue from inspections until now. We have all verbally and email agreed that the deal was off as of two days prior. I knew that I needed to contact my Broker-In-Charge to find out exactly where we (me and my sellers) stood. Turns out, her advice was right. First, my sellers WERE obligated to sell the home to the original buyers because they were Ready, Willing, and Able buyers. Secondly, if my sellers still wanted to get out of their contract with them, they would have to contact an attorney. Needless to say, my sellers were not happy with having to work with these buyers again, but they were legally obligated. Now, you may be thinking, "why wouldn't the sellers just accept the offer since it was full price and the house didn't appraise anyway"? The answer is; because they were tired of all the nit-picky things that had gone one from day one, they were more tired of the buyers and their agent dragging out every little thing and they knew that they had an offer just as good on the table waiting. By the way, the buyers with the second offer had to borrow far less money to make this deal happen and they were willing to make this deal happen even at full price offer and even if the house didn't appraise.
The moral to this story is this: in my state (NC) the Alternate 1 section of the Offer To Purchase spells out that this offer is contingent on appraisal. This means that the house must appraise at or exceeding the purchase price or, at the Buyer's option, the Buyer may terminate the contract. In a nutshell, the Buyer in this case had all of the rights and could say yes or no to us as long as they needed to up until closing. There is no wording that says they have to let you know by a certain date. Be careful if you ever get into this situation. Add a Modification Of Contract if you have to and set some dates or you may be on a see-saw like we were.
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