HELP - Can I get my cash downpayment back?? - Posted by Warren

Real Estate Investing
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Posted by Peter_MD on January 17, 2003 at 07:50:55:

Warren:

I agree with you that you should seek legal counsel.

…and thanks for sharing your experiences. The cold hard facts you provided could hopefully (probably will) keep some newbie beginner from making the same mistake.

Good luck to you…make certain you talk to an attorney that specializes in real estate matters…I can assure you that you may be surprised at what latitude the attorney has in enforcing contracts, agreements, etc.

Go get 'em is what I say…

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HELP - Can I get my cash downpayment back?? - Posted by Warren

Posted by Warren on January 15, 2003 at 19:00:40:

Hello everyone,

Now I know you are all not lawyers so I’m just looking for opinions.

I bought a house on a Contract For Deed in Georgia. I put $10K down and was to make payments for the next 12 months. OK everythings OK so far. However, it was time to refinance and finally purchase the home outright. The lender’s appraiser could not appraise the house for the contract asking price. Actually, it was $30K below the asking price. Well I didn’t like the sounds of that so I bailed on the deal.

Now I understand that my monthly payments have gone down the toilet. Understandable. But what about the $10K I put down? The contract had no contingencies for a refund if financing could not be acquired at the end of the 12 months. It also did not state that the seller could keep the downpayment if financing was not obtained. Can I get that money back? I have not ask the seller yet. I’m looking at my options right now.

The seller is a licensed realtor in the state of Georgia and I am just “Joe” buyer who didn’t know anything about buying a home from an investor.

Any help would be appreciated.

Warren

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Re: HELP - Can I get my cash downpayment back?? - Posted by Jim FL

Posted by Jim FL on January 17, 2003 at 22:57:46:

Warren,
I don’t think anyone here was being degrading to you, or treating you poorly.
Bottom line, the property was apparently worth…what the seller sold it for.
True market value is what someone is willing to pay for it.
You agreed to pay this price when you signed the agreement with the seller, therefore the house was worth that then.
An appraisal in my opinion is not the true market value of a house.
Honestly, had I been in your shoes, I’d have gotten another appraiser, and looked over the one that came in low.
The appraiser may have used bad comps, or made errors.
They may also have been right, and the appraiser, for the new buyers financing, if they used it, was wrong.

The reality is, when you signed the contract, you became the buyer/owner of the property.
When the value went down, according to the appraisal you got, you decided to walk.

Let me ask you this.
If you buy a car, place $2k down, and make payments for 18 months on a 5 year loan, then decide the car is not worth what you owe on it, can you just give the car back, quit making payments, and get your $2k back?
Of course not!

Same thing applies here.
You OWED the seller the remaining balance on the contract sale, and when the house did not appraise high enough, you were obligated to pay the price you agreed to anyway.

The seller was lucky and able to find another buyer, still making a profit I assume
However, there was no garuntee of this, and with you bailing like you did, you did leave the seller holding the bag.

Now I’m not a lawyer, this is not legal advice, so seek that if you really want to pursue this.

I just know that if I was where you are now with this situation, I’d chalk this up as a $10k lesson and move on.

If anything, the seller could have made this real messy for you.
They could have foreclosed on you, and gotten a judgement for the remaining balance of the contract, plus fees, court costs and other things.

I think you got off light really.

Stick around here.
Learn to buy a house with the risk minimized, and less money down.

Good luck, and don’t be offended, these people here were trying to help, and I think gave you an honest opinion, with no disrespect intended.

Jim FL

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Re: HELP - Can I get my cash downpayment back?? - Posted by Sean

Posted by Sean on January 17, 2003 at 10:52:24:

I agree with Ron, take all your paperwork and go see a good attorney. I suspect that unless your deal had a financing contingency your down payment is not recoverable. However I am not an attorney. Go speak to one.

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Re: HELP - Can I get my cash downpayment back?? - Posted by Warren

Posted by Warren on January 16, 2003 at 11:35:25:

Well everyone thank you for the replies. I will be pursuing this further.

GL(ON)yes I am “Joe Buyer” and yes the property at the time appraised for what he was asking for it. However, that was his appraiser. I didn’t know any better. That is why I am asking experienced investors on this forum for suggestions.

Now that we are out of the house I have found out that he has sold the property for his asking price. I even spoke to the person that bought it. They are investors and will develop it into an estate home and still sell it for more than what they paid. So the original seller didn’t lose anything.

I will be getting legal counsel on this matter.

Warren

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Re: HELP - Can I get my cash downpayment back?? - Posted by Zack

Posted by Zack on January 16, 2003 at 24:28:03:

I agree with GL and Steve even though there answers are the total opposite. Don’t get yourself in this situation and you won’t have to figure out how to get out. You could probably threaten the agent that you will complain to the real estate commission, because they are in a serious liablility situation, and get him pretty worked up, but my guess is your $10000 is long gone. If I gave someone $10000 I would know that what I was buying is worth it.

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Re: HELP - Can I get my cash downpayment back?? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on January 15, 2003 at 21:43:38:

Warren–(GA)----------

When you have a legal question, take your paperwork to a good local attorney who does only real estate law and ask your questions of him/her.

Disclosures: I am not an attorney. I get nothing if you go to an attorney. I get nothing from you at all. My wallet is thin and I am crying as I write this. End of disclosures.

Good Investing**********Ron Starr***********

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Re: HELP - Can I get my cash downpayment back?? - Posted by GL(ON)

Posted by GL(ON) on January 15, 2003 at 20:49:05:

Let me ask you this. If the appraisal had come in at $30,000 MORE than you paid would you have gone back to the seller and offered to give him half?

If the answer is no (which it is) then you have no right to ask the seller to share the loss when you weren’t going to share the profit.

When you bought the house whatever happened after that was yours, good bad or indifferent. If prices went down that’s your bad luck. Don’t go trying to put it on someone else.

If you can bail now after living there a year, you are only losing $10,000 and the seller is losing the other $20,000. Did you ever think of that? If he offered to split the loss with you, you would owe him another $5000.

And don’t give me that “poor little Joe Buyer” guff. It’s the malarky and you know it. You knew what you were getting into when you signed the papers.

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Re: HELP - Can I get my cash downpayment back?? - Posted by Steve

Posted by Steve on January 15, 2003 at 19:08:06:

Please know that I’m not an attorney. I have done a lot of real estate deals and I do own my own Realty office.
The agreement you have sounds like your calling the 10K a down payment not a deposit. I would go after the 10k and remind the agent he is an agent an governed by Ga Board rules. If I were in the situation of taking 10K on a house that appraised 30K lower (wow) than I contracted for, I would be at your house either re-negotiating or giving you your 10 k “down payment” back before you could complain to the board.
Just my thoughts.

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Re: HELP - Can I get my cash downpayment back?? - Posted by GL(ON)

Posted by GL(ON) on January 16, 2003 at 14:58:35:

It sounds to me like you should be suing the guy who told you the place was worth less than what you paid. He’s the one that lied to you and convinced you to get out too cheap.

The person who sold to you didn’t deceive you. He had it appraised at a certain price, and when you welshed on the deal he sold it at that price. He even sold it to investors who presumably know what property is worth in that area.

If you can buy a house not knowing what it is worth, live in it for a year, and sell at a loss still not knowing , then find out it was worth $30,000 more than you thought, then I would also suggest that real estate investing is not for you.

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Re: HELP - Can I get my cash downpayment back?? - Posted by Warren

Posted by Warren on January 16, 2003 at 17:03:46:

The property was not bought as an investment but as home for my family. I am not an investor or a wannabe investor. I guess that 2 independant appraisers got together and plotted against me to convince me that it wasn’t worth buying. Oh well shame on me for considering my family and not just myself. I found this website and read a few of the messages and then decided to post my request for help.

GL(ON), it seems that you are assuming quite a bit about me considering you don’t know anything about me. Have you been burned before or are you just bitter? What gives man? I am just a person trying to get some info on my situation. I gave the facts and that’s all I expected back from experienced investors. All the other emotional baggage was unnecessary.

The new owner knew it appraised at $30K below and still bought it because they are going to do a lot more to it than anyone would do even for a regular investor. Then they are going to sell it in a year or two. What I was saying is for me to go through on that deal would have put me in the negative for years to come. Obviously, they have the money and can afford to do this. I can not.

All I looked for was for some help from this forum.

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Re: HELP - Can I get my cash downpayment back?? - Posted by GL(ON)

Posted by GL(ON) on January 17, 2003 at 10:58:36:

Let me ask you again. If the property had gone up $30,000 would you have gone back to the seller and given him $30,000 more? Of course you wouldn’t. Nobody would. When you buy a property and it goes up, that gain is yours.

Likewise, if it goes down the loss is yours. You can’t have it both ways. You can’t say I will take the money if it goes up, but if it goes down I want someone else to hold the bag.

But from what you say the price didn’t go down at all. When you welshed on the deal the seller resold it for the same price to someone else.

Now you say the buyer overpaid by $30,000 because they are investors. This is impossible. Nobody would buy a house when they can go down the road and get the same thing for $30,000 less. Maybe some nut who fell in love with that house and doesn’t care what he spends, but certainly not an investor.

All I know about you is what you told me. That is, that you bought a house on contract; a year later someone told you it was worth less than you paid, so you bailed and left the seller holding the bag; then the seller resold it for the same price you paid; now you want to sue the seller and get your down payment back.

I am telling you that this is nonsense. The seller owes you nothing. Even if real estate went down (which it didn’t) he still owes you nothing because that is the chance you take when you buy real estate.