Legal Question in Real Estate Law in New Jersey

Binding contract?

I made an offer on a home for a price that was below the asking price acceptable to the owner. I had signed the contract.

My morgage institution made a determination that the appraisal was $35,000 below the original asking price of the seller.

The seller wants me to sign the contract with the original offer before he moves on.

That does not make sense to me.

Does the mortgage contingency apply and allow me to back out if I sign the mortage for the original asking price and after a walk through appraisal indicates the value is $35000 less?

I am afraid of doing this and losing my down payment?


Asked on 10/20/07, 3:38 pm

2 Answers from Attorneys
John Corbett Corbett Law Firm LLC

Re: Binding contract?

If there is a mortgage contingency and the house appraises for $35k less than your offer, either the seller agrees to lower the price or the contingency has failed and you can get out of the contract. If you have not signed the contract yet and you now sign knowing that the lender will not give you a mortgage for the asking price, that might be construed as an offer by you to make up the difference out of your own pocket. If that is not what you intend, don't sign. If you don't fully understand what I have said, don't sign anything until you have a lawyer to represent you.

See also: http://info.corbettlaw.net/lawguru.htm

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Answered on 10/20/07, 4:33 pm
Walter LeVine Walter D. LeVine, Esq.

Re: Binding contract?

I think this has to be discussed with the Seller, letting them know what your mortgage source has come up with an appraisal, before anything is signed. If you sign, as John stated, knowing that the house has appraised lower, you could be held for the differential and cannot back out later. If there is no deal (the Seller not accepting your signed offer or the Seller refuses to lower the price to meet your appraisal), there is no contract and your deposit should be refunded. Your attorney should assist you. If you need more information, contact me directly.

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Answered on 10/21/07, 3:54 pm


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