Earnest Money Dispute

[gigem94]

What is the name of your state? TX

We decided to sell our house but before we listed the house with an agent, a neighbors acquaintance was informed of the possibility of our house becoming available. This potential buyer came by for a viewing and we verbally discussed many typical residence topics, but specifically square footage. I highlight the square footage because I told the buyer that the county appraisal measured it at one size, yet we believed it to be larger because 1) the previous owner told us it was larger and 2) our insurance company measured it almost identical to what the previous owner had quoted. Anyway we negotiated on a price for the house, and the following day we brought in our agents to help us with the contract and closing details. A few of the items requested by the buyer were 1) proof of said square footage, 2) a sellers disclosure, and 3)a copy of the survey, all of which were provided at the signing of the contract. The buyer had inspectors come thru and we agreed to repair the buyers requested items by closing if and the buyer waived the remainder of the option period. We both agreed to this via amendment. However, just a few days before closing (post option period), the lenders appraiser comes through and measures the house, and his measurements reflect the smaller square footage, yet he appraises the house for more than what they are paying. The furious buyer requests that we adjust the price of the house as they believed the house to be larger and want the house price reduced significantly. We refused any price adjustments, complete all repairs according to the contract, only to find out that the buyers are not willing to close. Now the ex-buyers have requested the earnest money back, however we feel that we are entitled to the earnest money since the buyer defaulted and we completed our requirements in the contract. The contract is a standard TREC contract by the way. Our response to the ex-buyer was that the earnest money comes to us, but they have yet to sign the release.

It has been almost a month since our last communication, and my understanding is that I cannot get another contract on my house until I am released from this contract else I could be sued. Can anyone elaborate on this topic?

What should my next steps be regarding this in order to resolve it quickly and efficiently?

Do we have a sufficient legal case and is it worth pursuing?

 

[PghREA]

What is the difference in sq. footage?

 

[PghREA]

I highlight the square footage because I told the buyer that the county appraisal measured it at one size, yet we believed it to be larger because 1) the previous owner told us it was larger and 2) our insurance company measured it almost identical to what the previous owner had quoted.

What is the difference in sq. footage?

Its sounds like the Buyer was aware of the discrepancy between the county and your insurance company's measurements. Also, the Buyer walked through the house and was satisified with price he negotiated for the space.

I would push for the completion of the contract.

 

[gigem94]

The difference in sqft was about 200ft.

How do you 'make' somebody buy a house?

 

[PghREA]

The difference in sqft was about 200ft.

How do you 'make' somebody buy a house?

Sue for specific performance.

 

[Ohiogal]

And be forewarned that that is NOT a quick process.

 

[gigem94]

First of all, thanks for the advice on the matter, but I do not want to make anyone buy a house that they do not want, so I do not plan to sue for specific performance. I recently did request the earnest money from the title company and the ex-buyer refused to release the money. It sounds like a lawsuit is in my future, but is it worth it? EM=$3500 but I would think that would all get eaten up by attorneys fees and court costs, although I guess I could collect for those too according to the contract. I feel that I have a very sound legal case based on review with my attorneys. Does anyone have any other suggestions?

 

[gigem94]

Oh and I have a good feeling that the ex-buyer has already put another contract on a different house in our neighboorhood.

 

[moburkes]

My problem with the scenario is that you agreed to provide PROOF of said and you cannot provide that.

 

[gigem94]

My original paragraph states "all of which were provided at the signing of the contract." I DID provide proof of larger square footage at the signing of the contract.

 

[moburkes]

My original paragraph states "all of which were provided at the signing of the contract." I DID provide proof of larger square footage at the signing of the contract.

The county auditor's measurement and the appraiser's measurements mean much more than the previous owner's measurements and the insurance company's measurements. I know, specifically, that the insurance company ones are probably off because the person they pay to perform the inspection doesn't get paid to measure exactly, and isn't required to measure exactly. It is only required to be, coincidentally, within 200 sq. ft. of the actual. So, I'm still not sure what specific proof you brought to the table. Have you even attempted to measure it yourself, instead of replying on other people's opinions?

 

[gigem94]

The only proof I brought to the table was what was requested - proof of the larger square footage, which was provided in a document generated by the insurance company; also, a copy of the survey which also indicates the house measurements. The buyer already had proof of the public county appraisal which he already validated during the price negotiations.

The point is that the square footage difference was already disclosed from day one. The buyer chose to put a purchase price based on the higher square footage, without having an appraiser measure the house and provide an appraisal until a couple days before closing, well after the option period. If the square footage was a deal breaker to the buyer, it would seem logical that one of the first line items of due diligence during the option period would've been to have the house measured/appraised, and use that as information for price renegotiations if the house was priced on the higher square footage, or opting out if an agreement could not be reached. Further, using the appraisers’ information, why can we also not argue that the issue is moot because the appraisers valuation of the house is higher than what the buyer was contracted to pay? Do appraisers generally have accurate square footage measurements but inaccurate house valuations?

It makes sense that this is not an exact science – asking 5 appraisers to appraise a house will yield different results, and that information should be used as a guideline. Same holds true for neighborhood comps. The bottom line is that the price of the house was both inline with the comps and the appraiser’s findings.

 

[moburkes]

It appears that your "proof" was faulty. You agreed to provide proof, but an insurance company's statement isn't proof. The proof that YOU say he brought to the table was further proof that your proof was incorrect. I'm not sure how you put the burden on the buyer, when you specifically say that YOU will provide proof of the larger size, when none of the proof you privded means anything. People like to get a deal, so the higher appraisal of the smaller square footage may mean nothing to him.

 

[gigem94]

It appears that your "proof" was faulty. You agreed to provide proof, but an insurance company's statement isn't proof. The proof that YOU say he brought to the table was further proof that your proof was incorrect. I'm not sure how you put the burden on the buyer, when you specifically say that YOU will provide proof of the larger size, when none of the proof you privded means anything. People like to get a deal, so the higher appraisal of the smaller square footage may mean nothing to him.

Wow, you just made me look up the word proof with the number of times you used it in your last reply.

The insurance company's statement most certainly is proof to support my statement that the house had measured with larger square footage. I'm not sure how you see that differently.

 

[moburkes]

Wow, you just made me look up the word proof with the number of times you used it in your last reply.

The insurance company's statement most certainly is proof to support my statement that the house had measured with larger square footage. I'm not sure how you see that differently.

I did say it a lot. It was fun! I know because I'm an insurance agent, and I was allowed to estimate the aquare footage. I also know because I am a contractor that measures the property for insurance companies, and they don't require us to be accurate. They require us to estimate within +/- 200 square feet.