Can the buyers back out after the appraisal comes in lower than asking
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Can the buyers back out after the appraisal comes in lower than asking
The buyers were asking $229,900 we counter-offered but they said no they want asking price so we gave it to him now the appraisal comes back as $222,000. Legally, can the buyers back out?
Asked on July 13, 2017 under Real Estate Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
No, they can only back out due to a low appraisal if--
1) The contract contained a term or provision that the buyers could terminate without penalty if the appraisal was too low (this is often called an "appraisal contingency"; some contracts have them, some don't); or
2) There is a "finance contingency" or "mortgage contingency" allowing them to terminate if they don't get financing--and the low appraisal causes them to be unable to get a loan.
Otherwise, they are obligated and have to go through with the sale, even if the low appraisal and any effect it has on their financing causes them to have to pay more out of pocket (i.e. put more money down, finance less).
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