Profile picture for maustin05

Can we terminate under our mortgage contingency?

Let me start by saying we have a buyers agent representing us and we did ask him this but he told us he didnt know.

We are under contract on a house and the appraisal came in lower than the originally agreed upon sales price.  We made one counter offer and seller came back with an offer which was the exact appraisal price.  We have not accepted the offer or signed any addendums and want to know if we still have the right to terminate under the mortgage contingency and get our earnest money back.  The mortgage contingency in the original agreement stated that we be able to obtain financing based on the originally agreed upon price and after the appraisal we can not fund the purchase at the originally agreed upon price.

And yes if we terminate this agreement we will be looking for a more knowledgable agent that can better represent and advise us.

  • August 29 2012 - Pittsburgh
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (5)

I also think you are now back in the negotiation phase but I really, really think you should get your agent to call the legal hotline. This is a free member benefit he has access to and will resolve the situation quickly.

And don't blame your agent too much. This is not something that agents come across every day.

  • August 29 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr
I am not an attorney, and this is not legal advice. I am "just a consumer". But...

"We made one counter offer and seller came back with an offer which was the exact appraisal price. We have not accepted the offer or signed any addendums..."

Based on what you said, I don't believe you are under contract at this point-in-time. Typically, the mortgage/appraisal contingency is based on the house appraising for the agree upon price. If it does not, then negotiations re-open (i.e., the prior offer should now be void, due to the failed appraisal).

Based on the failed appraisal, you made a new offer and the seller has now countered. In other words, your actions also indicate you are back in negotiations. There is no agreed upon purchase offer/contract.
  • August 29 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for BlairCohen

I think the question here is "do you still want to purchase the home."  The reason I ask this is because you stated "We made one counter offer and seller came back with an offer which was the exact appraisal price."   If the appraisal came in low and the Seller is willing to meet the appraisal price this should make you happy as you are paying less then you bargained for and this also may satisfy the the mortgage contingency.  If you now do not want to purchase the property and you want out of the agreement there may be ways to handle this.  I have been selling real estate for over 35 years and the best advice any real estate professional should give you is you should consult a good real estate attorney.

  • August 29 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for CallTheSisters
If you used a PAR sales contract the mortgage contingency stated the amount of the loan you were seeking.  That contingency protects you so the loan amount cannot be higher.

If the appraisal came in lower and you made an offer, it would appear you were offering less than appraised value.  The seller countered and was willing to sell for appraised value.  Since this does not exceed the original loan amount you applied for, I'm not sure that there is basis to walk away from the contract.

If you agreed to buy at 180K and the appraisal came back at 175K and the seller is willing to sell at 175K you won.

I would not fault the agent because he could not answer this particular question.  My advice would be for you to tell your agent to call the legal hotline and speak with a PAR attorney who can advise you what your rights are for free.  We are not attorneys, and interpreting your situation, which is not the normal situation would be a violation of our license.

  • August 29 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Thanks for posting your question on Zillow.com.

Of course I would need to review everything in detail but your agent should have had an appraisal contingency which would have worked for you.

I am in the Pittsburgh market, so if you want to direct message me, perhaps I can help better.
  • August 29 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.