Cannot Secure Financing Due to Low Appraisal - What Now?

By
Real Estate Agent with Hunter-Broker

real estate contractFor many years, the California Association of Realtors (CAR) residential purchase form has provisions for the buyer to cancel if the appraisal comes in low.

That's all you need to cancel, if you haven't removed the appraisal contingency (assuming your agent protected you with one in the first place).

There is no need to complicate matters by talking about inability to get financing, if you DO have an appraisal contingency in force. You may want to get legal advice, as real estate agents can't practice law.

However, if I were representing you, I would suggest, subejct to legal adivce, that we inform the escrow in writing that you wish to cancel. If the other party unreasonably refuses to sign cancellation and release your deposit, they can be fined up to $1,000 per the purchase agreement (para 14f, and California Civil Code 1057.3).
 
If all parties agreed to arbitration, then it's time to have your agent (or the managing broker) consider mediation, to be followed by arbitration.  If you haven't agreed to arbitration, then perhaps you would be well served to have an attorney remind the seller and the seller's broker of the California Civil Code fine provisions for sellers who unreasonably refuse to release deposits.

I frankly don't know why anyone would pause any more than the minimum time provided for in the contract to move to enforce it.

No need to stress... just have your agent (perhaps with legal oversight) follow the contract provisions.

If you would like to know your area's market statistics in a snapshot report before buying or selling, go www.MyMarketTrends.info.

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Thanks,

Terry Hunter, MS Economics
Owner/Broker ePro
Terry@ Hunter-Broker.com
Mobile: 949-278-1595

Hunter-Broker.com
DRE License # 00573681

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

The appraisal contingency is one of the most valuable buyer protections.  On several occassions, I've had sellers counter an offer and include the requirement that the appraisal contingency be removed.

No way.

I don't remove the financing contingency either. 

Nov 29, 2010 10:08 AM #1
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Terry Hunter

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