Expert: Sue Bernstein - 12/31/2009

Question
We entered into a contract for a single family dwelling in central California on a bank owned property.  The original offer was accepted for 98,000 with the seller contributing 3% of the total home price towards closing costs.  We have since locked our loan rate with a Bank Of America using a FHA home loan program.  We have also paid for a home inspection.  The Home was appraised recently for 85,000 and the seller wants us to make up the difference in prices.  We cannot afford the 13,000 dollar difference and are willing to drop the 3% contribution in the contract, but we cant pay over the appraised price.  My question is can the money we have put into the contract or the money that is owed to the escrow account be recuperated or absorbed by the seller? What is the proper law or laws to address (if applicable please include sections and subsection numbers) when considering asking for or loses to be reimbursed by the seller? Is there any loyalty required by law to the buyer when they have invested into starting the escrow process?  Thank you for your time.
~Adam

Answer
Adam,

Unfortunately, you cannot be re-imbursed for expenses incurred if you should cancel the contract.  Have you submitted a written request to the seller to remove the 3% credit and lower price to $85,000?  I do a lot of REO properties and I have seen this done on many occasions. If you still have your loan contingency in place you can cancel because the property did not appraise and get your full deposit back.  Hope this helps.

Sue Bernstein