Sellers Attempting to Keep My Escrow $$$ (contingent, appraisal, clause, agent)

[Missy Me]

Goodmorning all,

I was in the process of purchasing a home, but the appraisal of the home came back a lot less than the selling price, thus, I was denied the mortgage because of "Insufficient Property Value". Based on this, I pulled the offer and requested my Escrow money back. The contract states that I am entitled to get my deposit money back if I am unable to obtain a mortgage as long as I wasn't "negligent" in trying to do so.

Well, the sellers are refusing to refund my money because they feel that I'm in breach of contract somehow and they are holding me liable for the repairs that they made, at my request, as a result of the home inspection. There's a lawyer involved and everything. Are they serious? I believe that these are bogus allegations that they're just making because they are upset that their home didn’t appraise at what they expected. Has this happened to anyone in the past? If this goes before a judge, can I hold the sellers liable for my lawyer fees and any time lost from work?

[Sandy Nelson]

Missy Me,

I'd have to have some questions answered:
Did you have a Realtor?
Is the Earnest Money held by an Escrow company?
Does your purchase and sale contract spell out how the parties are to proceed in an Earnest Money dispute?

[nsumner]

This happens a lot unfortunately. Since you had the loan contingency, your earnest money should be returned to you especially if the letter you received from your lender "prequalification or pre-approval letter) says that your loan is contingent on a satisfactory appraisal.

That seller is going to run into the same problem with the next buyer, the seller should just come down to the appraised amount and move on...

[Captain Bill]

Does the seller have an agent?
Do you have an agent?
Was the earnest money deposited with the title company? Your earnest money check should have been made out to the title company; not an individual.

The title company has the contract, and the language should be clear that the contract is contingent on the property appraising for the purchase price. Your agent should fill out the necessary form for you to present to the title company, and they should refund you the money and cancel the escrow.

You had the right to request the repairs to be made. However, the seller didn't have to make them until the appraisal contingency is removed.

The repairs are apparently something that need to be done, and each inspection would show those problems.

You are entitled to your earnest money refund.

[Brandon Hoffman]

Is there an appraisal clause?

[Silverfall]

This is going to vary from state to state due to how contracts are written. In Oregon when a dispute occurs and the money is less than $7500 (which is small claims) it has to be dealt with there. So in this case, unless you put more than $7500 down in earnest money, you would file $80 in small claims. You would win here.

Appraisals are a clause in our contracts and an automatic return of money to the buyer, unless the seller wants to come down to appraised value. The repairs are irrelevant here. So...it depends on what your contract states occurs. If you have a financing contingency then you should take it to small claims. In Oregon you can recoup attorney fees per our contract, but it depends what yours says.

Each state is different. I am not sure we are going to be able to help you all that much on this one.

[palmcoasting]

What does your attorney say? I'm surprised they did repairs before knowing you had a committment from the bank.