Many people who signed the pre-construction Agreement of Purchase and Sale when the real estate market was thriving are now finding themselves in an awful situation. With closing dates fast approaching, several buyers are facing the unfortunate reality of low appraisals. They now must make one of a few difficult choices: cover the shortfall with cash that was not budgeted for this transaction (or risk losing the deposits). Shop for Lenders Keep in mind that simply because lenders were willing to fund your deal a year ago at a certain value does not mean they will today, particularly in a time when third-party appraisals are coming in lower than expected. This is why we highly recommend employing any of our lawyers in Woodstock to help you find a lender who may be willing to offer you some form of concession. Check with Your Builder for a Blanket Appraisal Arrangement Some builders may have a strategic agreement with specific banks. The idea is to provide financing based on the purchase price in the Agreement of Purchase and Sale. It does not matter how much the appraised value is in such instances. You can go to a bank to apply for a mortgage as long as your builder has such an arrangement in place with that particular financial institution. When Bank Financing Falls Short A vendor take-back mortgage allows the builder to register the unpaid portion of the purchase price as a mortgage on the title. It means that you do not need to come up with the entire shortfall in cash. The builder finances that portion, and you repay it under agreed terms. You may ask your builder whether they are okay with it when your appraisal comes in low. You may ask any of our lawyers in Woodstock to help you with applying for one. Consider an Assignment An assignment is a transaction in which the buyer transfers their interest in the Agreement of Purchase and Sale to a third-party new purchaser. Generally, in pre-construction deals, assignments are not allowed except when, under the terms of the Agreement of Purchase and Sale, the buyer has the right to assign or the builder consents to it. Price Reduction Negotiation with the Builder You may ask your builder about the possibility of adjusting the price for the low appraisal. Builders tend not to want to reduce their prices. But you must try to negotiate with them whenever possible. A few may even agree to offer you a discount if everything goes smoothly. And it always pays to seek the assistance of any of the very best lawyers in Woodstock for all legal matters. Negotiate a Mutual Release with the Builder A mutual release is a document that can relieve both parties from their respective obligations relating to the Agreement of Purchase and Sale. The idea is to forfeit some or all of the deposit money put down by the purchaser. You may also wish to provide an additional amount of money to entice the builder to grant the release and avoid the potential for litigation. These mutual releases are rare and significantly depend upon the builder’s will. Approach a Seasoned and Qualified Lawyer We have a dedicated team of veteran lawyers in Woodstock to help buyers understand their rights and obligations, including checking their Agreement of Purchase and Sale. You may call us to schedule a consultation! We also encourage you to visit our website and learn about our scope of legal assistance in detail.