Seller Unhappy After Low Appraisal - Can they back out?

[hector3123]

I am in a peculiar situation. I signed a contract to purchase ($700k) home and entered into escrow. The home inspection showed a lot of repairs, so I decided to cancel the contract. My realtor sent “Cancellation of Contract” to the seller.

The seller called us back saying that they are willing to fix the repairs if we are interested in moving forward. We decided to move forward and ordered an appraisal. The appraisal came at $660 and now the seller is not happy. Our contract stated that if the appraisal comes lower than the contract price, we will pay an additional $10k over the appraised value. In this case, it is $660+$10=$670.

The seller is unhappy with the lower appraisal. Per contract term, seller has agreed to lower the contract price if the appraisal came lower.

Can seller back out from the deal now? Noting that we (buyer) sent the contract cancellation notice to them in the past. Although, it was never signed returned by the seller. It has been 3 days, no response from the seller.

[disneysteve]

I am not a realtor or attorney but I would think it all depends on the terms of the contract. What rights does the seller have?

I would definitely ask your realtor this question. They should be able to advise you on this.

[kork13]

Talk to your Realtor. The terms of your contract will dictate if they can back out, or what recourse you have.

Because you agreed to accept the seller's offer to repair in lieu of cancelling the contract, that form is now moot. If the contract allows the seller to back out with a bad appraisal, they could come back to you with a new cancellation notice. But I don't think that's common in most contracts.

My bet is that their realtor explained to them that they're bound by the contract, and either need a way to contest the appraisal as inaccurate or else simply accept it and move forward with the sale.