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When I purchased my Condo the asking price was significantly higher than the appraised value. Since I had to put down a nonrefundable deposit before the appraisal was doen I purchased the property in order to not loose out on the money I had put down. Is there any legal recourse I can take at this point in time or did I loose my right to do so when I closed on the property?
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Almost all real estate contracts have a clause for the situation you describe. At some point if you had a lender and they ordered the appraisal, you would have known that the property didn't appraise before you closed on the transaction. It's possible the earnest money was non-refundable, but the contingency for loan approval would likely have given you an out.
You should examine your paperwork carefully and if you still think something was amiss contact a real estate attorney in the area of your condo.
I doubt if anything was "illegal", but who knows, I learn something every day.
You should have made your offer to purchase contingent on the appraisal. When the appraisal came back lower than list price that was your chance to negotiate a lower price with the seller. At that point the seller would have had the choice to either lower the price to appraisal amount or keep the price and require you to make up the difference. With an appraisal contingency in place, if the seller decided to keep the high price you could have walked away with your deposite.
Almost all real estate contracts have a clause for the situation you describe. At some point if you had a lender and they ordered the appraisal, you would have known that the property didn't appraise before you closed on the transaction. It's possible the earnest money was non-refundable, but the contingency for loan approval would likely have given you an out.
You should examine your paperwork carefully and if you still think something was amiss contact a real estate attorney in the area of your condo.
I doubt if anything was "illegal", but who knows, I learn something every day.
Good luck
Not necessarily true. As long as the mortgage company is not giving a loan for more than the appraisal, they'll write the mortgage and you're on the hook to close. Debi is right that (at least in Michigan), you need to write in a "contingent on appraisal" into the contract to avoid this from happening. YMMV though.
I had a neighbor (whose ex-wife works in real estate surprisingly) lose a $90,000 deposit because the home they were looking at buying did not appraise for the purchase price, and they didn't want to close. No contingency in the contract.
Don't know what is "illegal" as noted in the thread title though?
It is perfectly legal for you to buy a home above the appraised value. The bank may not lend you more than the appraised value, but a buyer can pay any amount they wish.
You should review the contingency in the contract carefully, many contain a stipulation that the property must appraise at the agreed upon price or the buyer may have the option to continue forward at the lesser value or cancel the contract. This forces the sellers hand because the bank has given notice via appraisal that it will not lend more than the appraised value and the contract gives the buyer an out.
I don't know what recourse you will have after closing, something is missing here, you may need to contact your agent and an attorney and review your documents.
When I purchased my Condo the asking price was significantly higher than the appraised value. Since I had to put down a nonrefundable deposit before the appraisal was doen I purchased the property in order to not loose out on the money I had put down. Is there any legal recourse I can take at this point in time or did I loose my right to do so when I closed on the property?
Have you spoken to your buyers agent about this? Didn't he discuss the appraisal contingency with you?
In Arizona there is an appraisal contingency built into the contract.
So talk to your agent right away.
But as I read your post again, it appears as if you have already closed escrow. Is that correct? If so, then I think you have a done deal.
Bill
Bill
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