Reader question: Does the seller of a home know the appraised value of the home that the buyer has paid for? Does the agent representing the buyer have this information? Who has the right to information or can access it? Is the agent or their company able to help the seller get the information because the buyer is unwilling to share it? The closure is in a few weeks. It seems that the evaluation must be significantly higher than the listing price. We are moving to another state and are considering canceling the sale and renting the house. What are the financial ramifications if we decide to back down?
Monty’s response: A lack of critical information can impact my response, so these comments are qualified and general. While it is undoubtedly true that the expertise may have exceeded the purchase price, several other possibilities are just as plausible.
Each state has different real estate laws. Many states, but not all, have pre-written forms to fill out for consistency. Unless the purchase agreement requires the buyer to share the review, the review may not be mandatory. You should consult with a local lawyer to review your agreement and provide an opinion on the assessment sharing requirement if there is one. Also, ask the lawyer what the consequences would be if you break the contract.
• Many buyers are not obligated or willing to share this information from a privacy standpoint. Confidentiality could well be the reason the buyer refused your request.
• Did you not receive a copy of the lender’s approval document? With closing still a few weeks away, the buyer may not yet have convinced the lender to grant the loan.
• There may be an ongoing negotiation on the rate and terms.
• The rating may be too low. Negotiations may be underway on how to fill the shortfall.
• Your agent may not know the appraisal amount.
In my experience in real estate, owners with little or no education or experience are at high financial risk of becoming owners. Some tenants are very familiar with the law and take advantage of newbie investors. Incidents such as non-payment of rent, anger from neighbors or damage to property are common. On the other hand, your experience and education may go well with the prospect of becoming a homeowner.
Always read the contracts
Finally, it is not known if you have read the contract. Real estate consumers sometimes abdicate the details of the contract to a real estate agent. If you haven’t read the agreement, it may include the answers you’re looking for. With the advent of websites and lengthy “terms of service contracts,” as well as the ever-increasing number of pages in real estate documents, busy consumers have grown accustomed to signing documents without reading them. I have no experience with website contracts, but not reading real estate contracts can lead to costly problems. Please proceed with caution.
Richard Montgomery is the author of “House Money – An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home”. He advocates for industry reform and offers readers unbiased real estate advice. Follow him on Twitter @dearmonty, or on DearMonty.com.