earnest money not returned

[Isaac Geller]

Hi all,

Me and my partner signed a contract giving us 7 days to do inspections when the document expressed that we get the earnest money back if we don't want to continue with the deal. I quote "Earnest Money Deposit will be REFUNDABLE for 7 days following the signing of this agreement if property does not pass buyers inspection"

We are OOS investors so we tried to find agents working at  the specific area where the property is located. We found only one and she didn't do enough deals in that area to give us good info of what the ARV is. We also so at zillow that while propetied nearby are sold at 300K and above, in the specific location of the property houses were sold <100K. So we decided not to move forward. The seller told us that since we didn't make an actual inspection of the property with a contractor we can't get our money back. This is the first time something loke that happened to me.

Can anybody here knows how should I act? What are my rights, and what are the options I have?

Can't express how bad I feel about it, like someone is trying to get advantage of you being far away, hoping you will just accept the blow and move on.

Thanks!   

[Charlie MacPherson]

@Isaac Geller It depends entirely on the wording of your contract.  

I've seen some that simply state "home inspection", which could possibly be satisfied by a drive-by or evaluation of the numbers - though that language could be challenged.  It's not especially clear.

I've seen other offers (like our current MA Association of Realtors form) that specifies that inspections are to be done by people "regularly in the business of performing such inspections". In that case, you lose your EMD if you did no such inspection.

If it's not too late, hire an inspector and follow through. Then back out and get your EMD back - assuming that it's enough of a deposit to make it worthwhile.

It's also pretty astonishing that an agent can't provide an ARV.

I would DEFINITELY not rely on Zillow for comps.  While their data is accurate in some cases, they are legendary for providing bad information.  "Nearby" sold at $300K+ but "specific location" sold at less than $100K makes no sense.

Unless you account for the size, features, location and condition of these "comps" (and I'm using that term very loosely), the price data is meaningless.  It could very well be that the sub-$100K properties are needing a gut rehab and will sell north of $300K when complete.  Or it could be that the sub-$100K properties are in a mobile home park that has a nicer neighborhood close by.

I suggest drilling down more deeply to figure out what's going on.  There's too much information missing from what you've said so far.