What to do if a purchase contract listed the wrong square footage?
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What to do if a purchase contract listed the wrong square footage?
We are using a VA loan, we were pre approved for 220k and the home is 225k We signed a contract, they countered we settled for 223,900k. We went through the processes of inspections and recently received the official appraisal which came back in at $223,900 exactly. contract was signed using the information we received from the broker and MLS our agent used. When the appraisal came back it was 200 less sq feet then we were told, immediately contacted our agent to let her know. She said her broker firm told her they agreed to fix the things the home inspector found (not the appraiser) so you are bound by contract. How can this be if the appraisal wasn’t done until after? Now we are stuck with a home that is too small and we are over paying per sq. ft.
Asked on September 25, 2011 under Real Estate Law, Oklahoma
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
When people purchase residential real estate the pruchase price is based upon the comparables and the appraisal for the loan given the home's condition including adjustments for costs of repair of disclosed problems. Residential residence prices, unlike commercial property are not based upon square footage.
Many commercial leases are rented per square footage. Commercial agricultural property is purchased typically per price per acre. This is not the case for residential proeprty be it one's intended home or a residential unit designed to rent out.
Although the purchase contract may have 200 square feet more than what your appraisal has for the home, the issue is what amount is the home appraised for with respect to your purchase price. If they are equal or quite close in value, the 200 square feet deviation has little bearing upon the home's fair market value given current economic conditions.
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