Lender and Realtors unresponsive during appraisal contingency

[Chas863]

Originally Posted by mom2twinboyz

@Chas nope I believe you are incorrect. I am an agent and it is my belief it is still an enforceable contract. Thr only difference is if the buyer backs out because appraisal was too low they can't get EMD back. Someone can correct me if I am wrong. The agent should have had everyone agree to the extension on time but I see time and time again lenders ignoring deadlines on contracts.

I'm assuming that the contract was contingent on financing as specified in the contract. In other words, the buyer would get a loan of $85,000. If the appraisal comes in at $82,000 then the lender is not going to lend $85,000 to the buyer. Therefore, the buyer is released from any commitment to purchase because he could not get a loan in the specified amount.

It may be possible for the buyer and seller to work out the differences by modifying the existing contract, but as it stands right now there is no contract because the loan contingency was not met. It's pretty cut and dried as I see it unless there's something I don't understand about the contract.

[Chas863]

Originally Posted by Bankarow

My realtor told me we have a binding agreement once i signed the offer and it was accepted. The problem is the low amount and the lender didn't even want to go forward with appraisal when the desktop came in low as they were convinced the full appraisal would also come in low.

I have agreed to "bridge the gap" if appraisal comes in low but not too sure how it works and would like to ask

Lets say the original morgage from lender was $75,000 and final appraisal comes in at $70,000, i understand i will put additional $5,000 down to "bridge".

I don't know what happens to this $5,000. Is it added to the downpayment and then my outstanding loan will be based upon $70,000? i.e, I will be putting downpayment of $14,000 + $5,000 =s$19,000? And this downpayment is deducted from $70,000 appraisal? So I will be repaying back $70,000- $19,000? = $51,000?

Or will they be basing my loan on $75,000 and so my downpayment will be deducted from $75,000? ($75,000- 19,000 = $56,000)?

It's very clear to me that you need some help in understanding the offer to purchase that you signed. None of us here have seen that offer and the more that you write about it the more confusing it gets. Since we can only guess what you may have agreed to in the offer, we can't be sure that our advice is correct.

You REALLY need to have someone look at that contract and interpret it for you because we can't advise you if we don't know what the contract says. And it's pretty clear that you don't know what it says either. Get some help from someone who can understand just what it is that you signed.

[mom2twinboyz]

Originally Posted by Chas863

I'm assuming that the contract was contingent on financing as specified in the contract. In other words, the buyer would get a loan of $85,000. If the appraisal comes in at $82,000 then the lender is not going to lend $85,000 to the buyer. Therefore, the buyer is released from any commitment to purchase because he could not get a loan in the specified amount.

It may be possible for the buyer and seller to work out the differences by modifying the existing contract, but as it stands right now there is no contract because the loan contingency was not met. It's pretty cut and dried as I see it unless there's something I don't understand about the contract.

Nope...he is out of the financing and appraisal contingencies. Full steam ahead. If he can't or won't close he's out of the EMD. All the appraisal contingency does is leaves him off the hook if appraisal comes in low. Now he's out of that he has to make the difference up if he still wants the house if it comes in low. Or walk and lose EMD. It's a legally binding contract still. Now it just says house doesn't have to appraise at a certain amount. There's a chance Sellers could help and amend contract too depending on how nice they are.