I made an offer on a co-op which was verbally accepted. I had originally planned to put 30% down. The offer included the standard clause "unit must appraise at or above purchase price." The seller wants the clause removed. I said no. I offered them $10K less and I would remove the clause. They declined. My realtor informs me that if I change my down payment plan to 20% I would be protected under... [more]
I made an offer on a co-op which was verbally accepted. I had originally planned to put 30% down. The offer included the standard clause "unit must appraise at or above purchase price." The seller wants the clause removed. I said no. I offered them $10K less and I would remove the clause. They declined.
My realtor informs me that if I change my down payment plan to 20% I would be protected under the mortgage contingency from my bank and that I would be able to back out if the unit ends up appraising below purchase price.
Is this true? And if yes, that begs the question.....surely the seller knows this. Am I msising something here. I like the place and if I am fully protected would like to proceed. But only if I have the chance to back out if the appraisal is below purchase price without losing any money.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
what does your attorney say?
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Response by abramsj
over 15 years ago
Posts: 5
Member since: Jul 2009
I do not have one yet. The realtor's comments came from their attorney.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
if you are located in nyc, there is nothing binding until you sign a contract which you obviously shouldn't do without being represented.
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Response by Rob360
over 15 years ago
Posts: 84
Member since: Jun 2010
If it were me, I would walk away. Seller probably knows that it won't appraise for asking price. Then he has your deposit if u go into contract and u will have to fight to get it back.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
there is no deposit without a contract. there shouldn't be a contract without a lawyer. ask your lawyer.
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Response by bramstar
over 15 years ago
Posts: 1909
Member since: May 2008
Don't give up contingencies unless you are willing to take a risk. Get an attorney if you are placing offers.
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Response by alanhart
over 15 years ago
Posts: 12397
Member since: Feb 2007
It sounds like the seller doesn't have much confidence in the value of his apartment vis a vis the price you offered. That should give you some more incentive to walk.
Your broker's take on it is absurd -- your bank has no direct contractual relationship with the seller. Not sure if broker's opinion is true anyway, but even if it is wouldn't you still want an explicit clause in YOUR contract with the seller?
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Response by abramsj
over 15 years ago
Posts: 5
Member since: Jul 2009
Attorney told me to get an accepted offer before they will work with me. But the seller won't sign the offer acceptance unless I remove the appraisal clause. It is the attorney associated with the realtor who says I am protected...but yeah whose side are they on :)
I didn't feel good about it....and I guess I still do not.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
what is an offer acceptance? find an attorney who is willing to talk to you. something is wrong here.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
the way this is supposed to work is that the seller's attorney sends a draft contract to your attorney for review. this is prior to anything being signed and prior to any money changing hands.
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Response by abramsj
over 15 years ago
Posts: 5
Member since: Jul 2009
Sorry, I am probably using bad terminology. It is a one pager called "Offer to Purchase Real Estate" I sign, then seller signs. It is on the letterheard of my realtor.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
don't sign it.
get a lawyer if you want to proceed.
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Response by gcondo
over 15 years ago
Posts: 1111
Member since: Feb 2009
it is pretty hard to estimate how a bank's appraiser will value a property isnt it? Why do you want this in there anyway? I have seen appraisers ending up all over the place in my building - each is different. If you feel you are paying market price, then, well...
If you need a financing contingency in your contract put that in, but why an appraisal contingency? same thing really i guess
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Response by Sunday
over 15 years ago
Posts: 1607
Member since: Sep 2009
I agree with cc, don't sign anything without your lawyer reviewing it first.
With that said, if I am the seller, I would not agree to the unfair term that the "unit must appraise at or above purchase price" either. I would agree to "unit must appraise at or above 90% of purchase price." That, or you agree to increase the purchase price to that of the appraised value if it appraised for higher.
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Response by joelmimi
over 15 years ago
Posts: 13
Member since: May 2009
The realtor's attorney may be trying to get to the same place by suggesting changing the offer to 20% down. If the unit appraises for less than offer, then the bank may not be willing to underwrite the mortgage. Whereas in a 30% down situation there is more wiggle room on the appraisal relative to the mortgage ratio.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
this whole deal is fishy. why does the realtor have a lawyer involved? its hard to believe that the lawyer is actually advising you.
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Response by ab_11218
over 15 years ago
Posts: 2017
Member since: May 2009
just change the offer to 20% down. you can always change it after the appraisal comes in. this way you are protected.
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
this is an excellent example of how buyers and sellers can end up hating each other. if you are not willing to make the purchase if the appraisal is lower and the seller is not willing to agree to that, move on. don't try to trick the seller.
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Response by Sunday
over 15 years ago
Posts: 1607
Member since: Sep 2009
cc, agreed 100%. Imagine a seller posting here asking whether she should agreed to a buyer's demand to include the clause that the "unit must appraise at or above purchase price."
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Response by front_porch
over 15 years ago
Posts: 5325
Member since: Mar 2008
historic day! I agree with cc.
who, btw, told you that was a "standard clause"? the fact that you think that, and that you're putting in an offer on a one-page form, makes me think you're not in Manhattan.
ali r.
DG Neary Realty
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Response by abramsj
over 15 years ago
Posts: 5
Member since: Jul 2009
I am not in Manhattan, and honestly I assumed it was standrard only because it was preprinted on the one page realtor's form. I am not in any way trying to trick the seller either. I am just trying to find out if my interests would be protected. Thanks for the help all. I really liked the place and wanted to feel comfortable moving forward if I was protected. I do not have that assuance so looks like I will pass on it.
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Response by LucilleIsSorry
over 15 years ago
Posts: 452
Member since: Jan 2011
can you post the general location of where you're buying? everyone seems to agree that around these parts, the step after a verbal acceptance of offer is the seller's attorney sends a copy of the contract to your attorney, who should be ready and waiting to recieve and review it with you. you should have had the name of the attorney who would doing this service for you for a flat fee before even starting the process. damn lawyers. but it's true.
what does your attorney say?
I do not have one yet. The realtor's comments came from their attorney.
if you are located in nyc, there is nothing binding until you sign a contract which you obviously shouldn't do without being represented.
If it were me, I would walk away. Seller probably knows that it won't appraise for asking price. Then he has your deposit if u go into contract and u will have to fight to get it back.
there is no deposit without a contract. there shouldn't be a contract without a lawyer. ask your lawyer.
Don't give up contingencies unless you are willing to take a risk. Get an attorney if you are placing offers.
It sounds like the seller doesn't have much confidence in the value of his apartment vis a vis the price you offered. That should give you some more incentive to walk.
Your broker's take on it is absurd -- your bank has no direct contractual relationship with the seller. Not sure if broker's opinion is true anyway, but even if it is wouldn't you still want an explicit clause in YOUR contract with the seller?
Attorney told me to get an accepted offer before they will work with me. But the seller won't sign the offer acceptance unless I remove the appraisal clause. It is the attorney associated with the realtor who says I am protected...but yeah whose side are they on :)
I didn't feel good about it....and I guess I still do not.
what is an offer acceptance? find an attorney who is willing to talk to you. something is wrong here.
the way this is supposed to work is that the seller's attorney sends a draft contract to your attorney for review. this is prior to anything being signed and prior to any money changing hands.
Sorry, I am probably using bad terminology. It is a one pager called "Offer to Purchase Real Estate" I sign, then seller signs. It is on the letterheard of my realtor.
don't sign it.
get a lawyer if you want to proceed.
it is pretty hard to estimate how a bank's appraiser will value a property isnt it? Why do you want this in there anyway? I have seen appraisers ending up all over the place in my building - each is different. If you feel you are paying market price, then, well...
If you need a financing contingency in your contract put that in, but why an appraisal contingency? same thing really i guess
I agree with cc, don't sign anything without your lawyer reviewing it first.
With that said, if I am the seller, I would not agree to the unfair term that the "unit must appraise at or above purchase price" either. I would agree to "unit must appraise at or above 90% of purchase price." That, or you agree to increase the purchase price to that of the appraised value if it appraised for higher.
The realtor's attorney may be trying to get to the same place by suggesting changing the offer to 20% down. If the unit appraises for less than offer, then the bank may not be willing to underwrite the mortgage. Whereas in a 30% down situation there is more wiggle room on the appraisal relative to the mortgage ratio.
this whole deal is fishy. why does the realtor have a lawyer involved? its hard to believe that the lawyer is actually advising you.
just change the offer to 20% down. you can always change it after the appraisal comes in. this way you are protected.
this is an excellent example of how buyers and sellers can end up hating each other. if you are not willing to make the purchase if the appraisal is lower and the seller is not willing to agree to that, move on. don't try to trick the seller.
cc, agreed 100%. Imagine a seller posting here asking whether she should agreed to a buyer's demand to include the clause that the "unit must appraise at or above purchase price."
historic day! I agree with cc.
who, btw, told you that was a "standard clause"? the fact that you think that, and that you're putting in an offer on a one-page form, makes me think you're not in Manhattan.
ali r.
DG Neary Realty
I am not in Manhattan, and honestly I assumed it was standrard only because it was preprinted on the one page realtor's form. I am not in any way trying to trick the seller either. I am just trying to find out if my interests would be protected. Thanks for the help all. I really liked the place and wanted to feel comfortable moving forward if I was protected. I do not have that assuance so looks like I will pass on it.
can you post the general location of where you're buying? everyone seems to agree that around these parts, the step after a verbal acceptance of offer is the seller's attorney sends a copy of the contract to your attorney, who should be ready and waiting to recieve and review it with you. you should have had the name of the attorney who would doing this service for you for a flat fee before even starting the process. damn lawyers. but it's true.