Profile picture for cameronbrokaw

Dual Agency - Buyer Needs Advice. Offered over asking. Multiple appraisals low. Agent pressuring..

Background
- First time home buyer
- Pre-approved
- Saw a home that I liked one weekend and decided to make offer with listing agent the next day
- Offered full asking
- Agent comes back following day and says there is competing offer
- I raised my offer and offer accepted following day

Issues
- In a perfect world I would have been happy as I got a house that I feel was good value. Not my dream house, but a house I liked, with potential...however appraisal came in 5% lower than offer price
- Multiple appraisal reconsiderations denied
- Agent is not being helpful at all. I know it is tough to be neutral, but at a minimum, I expect some hand holding for a very qualified first time home buyer that has never been through this. Appraisal results were outside all of our control, but agent has some duty to advise both client with the goal of closing the deal in a fair way and earning commissions from both sides
- Instead, this agent is resorting to bad advice or pressure tactics

  • April 22 2011 - San Francisco
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Answers (13)

There has been some great advice already given. I agree with most of the advice. However, one question remains: do you have a real estate attorney representing you, or are you acting as your own counsel? Dual agency is a bad situation for you as the dual agent does not really have loyalty to you. Since you have no buyer agent to act on your behalf, I would strongly suggest legal representation. If you are being pressured and feel uncomfortable in the decision(s) you are making, then strongly consider to hold your ground, or let this contract to purchase go. There are other properties out there and next time around, maybe have a buyer agent or attorney in place from the beginning. GLTU  :-)

  • April 23 2011
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The low appraisals are your best friend - take their advice......you might be paying too much......
  • April 22 2011
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There is no way to know for sure if there was another offer or not, or what your agent's motivations are but in my opinion there is no way an agent can represent both the Buyer and the Seller at the same time and be fair. When I represent a Seller I want them to get the highest price and have the fewest headaches in terms of giving credits or concessions. When I represent the Buyer I want exactly the opposite.
If you can get out of this deal based on your appraisal contingency then I think you should consider doing so. Otherwise, you must insist to your agent that he or she write an addendum to the contract that says something like "Buyer hereby removes appraisal contingency subject to purchase price being $xxx,xxx." Put the appraised value in there. If they don't want to budge on price then let the property go. It's not the place you're meant to be in.
  • April 22 2011
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Profile picture for cameronbrokaw
Hi Oggi,

Yes, I wrote a check for 3% of offer price.

Contract seems to be a standard PRDS contract from Advanced Real Estate Solutions 2007.
  • April 22 2011
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Presumably, yes.  I trust your initial deposit is no more that 3% of your offer price and that you used the SFAR purchase contract.  The contract terms state:


"3. FINANCING PROVISIONS. Buyer affirms that only the loan(s) specified in paragraphs 1C and 1D are needed to complete this purchase and shall act diligently and in good faith to obtain them. Within three (3) days after Acceptance, Buyer shall submit to lender(s) a complete application with all supporting documentation and authorizations required by the lender(s). If Buyer does not remove in writing the loan condition(s) established by paragraph 1 within thirty (30) or  ___ days after Acceptance, either party may thereafter terminate this Contract. Brokers urge Buyer to confirm loan(s) will fund before removing loan conditions."

"4. APPRAISAL. This Contract is __ (if checked) subject to a written appraisal at no less than the Purchase Price. If Buyer does not remove this condition in writing within fifteen (15) or __ days after Acceptance, either party may thereafter terminate this Contract."

The way these SFAR contract terms are written,  an option is given to both parties to terminate the contract if the contingencies are not removed by the contingency date.  You will find them on  the first page of your purchase contract.  


This is not legal advice and should not be considered as such.  Acting upon this information and its consequences shall be your responsibility. Seeking legal advice is recommended. 


Oggi Kashi
Paragon Real Estate Group
CA DRE 01844627 
  • April 22 2011
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Profile picture for sunnyview
Please do not release any contingencies. You would have to read your contract, but most of them contain a financing/appraisal contingency. generally, that clause means if the house does not appraise or you cannot get financing in good faith you are out of the contract and get any deposit money back.

Do not budge on your financing or your offer either for right now. I do not know your situation, but the lender and the agent may be doing what they can to "get you into the house" even if it overpriced. Unless you are willing to overpay and bring more money to the table out of pocket, the only solution to the house not appraising is the seller lowering the price to meet the appraisal. If they are unwilling, I would walk.

Make sure and keep ALL emails with your agent. Make it clear that you will not pay more than the appraisal for the house and that you want to know when you will get your deposit money back since the house did not appraise. You need to keep as much of this in writing as possible just in case the agent you are dealing with is problematic. A good agent would have explained things to you so I am scared about what I am hearing in your question. This situation does not sound good to me.
  • April 22 2011
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Profile picture for cameronbrokaw
Thanks Oggi. I have not released loan contingency (which includes appraisal contingency). If that date comes and goes am I automatically released from the contract?
  • April 22 2011
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This is exactly why I don't believe in dual agency except for special circumstances.  I hope you have not removed your loan and appraisal contingencies yet.  If you have already, then the seller has you.

When the property does not appraise for the offer price, the seller is usually better off taking less to make up the difference.  If they don't, they will have the same issue with the next buyer.  

If your contingencies are intact, you can try playing hardball.  Try telling the agent you will walk away if the seller will not accept a reduced price.  I am not aware of your specific contract terms but if possible seek another agent to represent you.  You need full representation.

This is not legal advice and should not be considered as such.  Acting upon this information and its consequences shall be your responsibility. Seeking legal advice is recommended. 

Oggi Kashi
Paragon Real Estate Group
CA DRE 01844627 
   
  • April 22 2011
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You can ask another agent do your negotiating on your behalf.  You also don't have to buy a home that isn't able to appraise at the price you offered to pay.

If the home isn't able to appraise the bank won't give you a loan.  At this point I can not figure out why any seller in this market would make a fuss but you definitely don't have to feel 'stuck' in the situation. 

If you are still in 'negotiations' and there hasn't been 'agreement' get out of that contract and let the seller's sit with the house.
  • April 22 2011
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Profile picture for B Mike West
Dual agency can cause difficulties when things do not go smoothly.  It sounds like you need your own representation.  Brian has an excellent idea.  Tell the agent that you want his broker to represent you or assign an agent to represent you.  If the agent refuses, walk away!

With the new appraisal requirements appraisals are not as accurate as they once were.  We can thank our lawmakers for that.  However, I would expect that the seller should lower their price if they want to close the deal.
Of course, the San Francisco market is off the charts in comparison to the rest of the market.  Good luck with it.
  • April 22 2011
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Hi Cameronbrokaw,

My best advice is that maybe you should consult an attorney. There are many reasons why they may not be coming down on the property.

Depending on how your contract was written, you may not be obligated to continue on in this process. There are a lot of variables and this may be out of the agents control.  The appraisal is usually bank related and since appraisers don't usually revise their evaluations of the property value, your best option may be to have a third party take a look at your contract and see what your options are from there on out.

As someone who works with primarily 1st time homeowners in my own market, I know that these bumps in the road are discouraging, but I still say try again and I hope this helped :)
 
Thanks,
Julenn Keeling :)
  • April 22 2011
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Thanks for your question Cameron and what an important one it is.  Sorry you have to go through this.  There are a couple of things that go through my head, first is to have the agent's broker take over representing you immediately for proper representation.  When it comes to the appraisal, you have to go with that price, the seller loses.  The seller will have to come down in price, if you move on and another buyer comes in the house SHOULD still appraise for the same price leaving the seller in the same situation - with an overpriced house determined by the one who holds the money....THE BANK!

Good luck, hope this helps.  Feel free to contact me.
  • April 22 2011
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Profile picture for cameronbrokaw
Here is some of the bad advice and pressure tactics that I feel I am getting:
- Take out a 2nd Loan (outrageous interest rate)
- Ditch your loan agent for another (no guarantee of higher appraisal and doesn't seem right)
- Ask seller to carry the loan for difference at lower interest rate, but within a couple of years (no advice on what is reasonable to ask for)

Agent just send me and my agent emails like "Any update on appraisal?". Am I wrong in thinking that this agent is not acting in my best interest or even in the best interest of the buyer to try and negotiate a clean close that can include all parties chipping into close the deal?

Am I wrong it thinking that it is unhelpful to tell the buyer:

- You can do whatever you want like ask for lower price, but there is a backup offer with larger downpayment
- Another agent I spoke too thinks that this house should have been listed for a lot more therefore you should be okay with paying even more because this is such a good deal

Thanks in advance...we are coming down to the wire now.
  • April 22 2011
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