If you’re worried that a high appraisal will give the seller second thoughts about selling their property at the agreed-upon price, you can breathe a sigh of relief. While sellers can certainly hope for a higher appraisal, they cannot change the price or withdraw from the appraisal simply because it’s higher than expected. Here are a few reasons why:
Overall, it’s rare for a seller to change the price or withdraw from an appraisal simply because it’s higher than expected. As a buyer, it’s important to have a good understanding of the sales agreement and to work with a trusted real estate agent or attorney who can guide you through the process.
The Binding Nature of the Sales Agreement
When a seller accepts an offer from a buyer, a legally binding agreement is formed. This sales agreement typically outlines the terms of the transaction, including the purchase price, closing date, and any contingencies that must be met. Once the agreement is signed, both parties are obligated to fulfill their respective duties under the agreement. This means that the seller cannot change the price after the appraisal has been completed without risking the breach of the agreement.
Understanding the Role of Appraisal in Real Estate Transactions
An appraisal is an evaluation of a property’s worth by an independent professional appraiser. It is typically conducted to determine the fair market value of a property in the current real estate market. Appraisals are usually requested by the buyer’s lender as a condition of the mortgage loan. In some cases, a seller may request an appraisal to justify a higher asking price or to contest a lower valuation.
However, the appraisal does not change the terms of the sales agreement. The seller cannot withdraw from an appraisal that is too high or resign for a more profitable deal because they are legally bound by the sales agreement.
Seller’s Rights in the Event of a High Appraisal
While a high appraisal can be a favorable outcome for the seller, it does not give them the right to renegotiate the terms of the sales agreement. If the appraisal comes in higher than the purchase price, the buyer can use this as leverage to request repairs or other concessions before closing. However, the seller is not required to make these concessions. They can choose to proceed with the sale as agreed upon in the sales agreement.
If the seller is unhappy with the appraisal results or the buyer’s requests, they can attempt to negotiate a different deal with the buyer, but they cannot just withdraw or resign the agreement because of their high appraisal expectations.
Withdrawal from an Appraisal: Are There Legal Consequences?
If the seller does decide to withdraw from an appraisal or rescind the sales agreement, they may face legal consequences. The buyer could potentially file a breach of contract lawsuit, seeking damages for expenses incurred during the sales process. Additionally, if the seller puts the property back on the market at a higher price, they may be sued by the original buyer for breach of contract and possibly face other consequences.
The bottom line is that sellers should never sign a sales agreement they are not comfortable with or expect to renegotiate terms after the appraisal.
The Implications of Breaching a Sales Agreement
Breaching a sales agreement can have serious implications for the seller, including legal and financial consequences. If the seller fails to fulfill their obligations under the agreement, they could be sued by the buyer or face other penalties. This could result in monetary damages being paid to the buyer or even the loss of the property.
It is important for sellers to take the sales agreement seriously and fulfill their obligations under the agreement. If they are uncomfortable with the agreement or the terms of the appraisal, they should work with their agent and legal counsel to negotiate terms upfront.
Avoiding Misunderstandings with Clear Contract Terms
To avoid misunderstandings and legal issues, it is crucial that both parties have a clear understanding of the terms of the sales agreement. The contract should be in writing and include all the essential terms of the transaction. This includes the purchase price, closing date, and any contingencies.
Using plain and unambiguous language can help avoid misinterpretations and possible legal challenges. Additionally, both the buyer and seller should carefully review the contract terms before signing to ensure understanding and agreement on all points.
In summary, once a seller agrees to a purchase price and signs a sales agreement, they are legally bound to the agreement. While the appraisal can impact the transaction, it does not give the seller the automatic right to renegotiate the sales terms. By working with their agent and legal counsel to understand the sales agreement, sellers can avoid misunderstandings and potential legal consequences.
