Dear Dr. Don,
My husband and I attended a “discovery tour” to look at property at a North Carolina retirement community recently. For about $150, we were provided three nights at a local hotel, a bus tour of the area and a few lunches and dinners. During our “free” time, we were provided access to the community and given the ability to look at model homes and available lots for sale. As you’ll soon understand, this “deal” wasn’t quite as good as it originally appeared.
The sales team “offered” a 10 percent discount on the price of the property if we agreed to purchase the property during the tour weekend. They also offered to pay closing costs and the first year’s homeowners association fees. Good deal, right? Not so much. We bought a lot originally priced at $100,000 for $90,000. Later, when we were working to finance the purchase of the lot, we learned it was actually worth just $90,000, not $100,000 as had been stated.
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I spoke with a North Carolina lender who told me that lots at this community typically are valued at the supposedly discounted prices being offered. He said they never appraise as high as the original price.
Would you consider this a deceptive or bait-and-switch sales tactic? We agreed to purchase a lot if the appraisal came in lower than the payment price. Would it be appropriate for me to ask for a 10 percent discount, similar to the one stated by the sales team during the tour?
I just feel that if the seller is offering a true discount, the starting point should be at the actual value of the property, not their inflated cost.
Please let me know what you think about this situation.
— Lisa Landowner
I have friends and family who have taken advantage of similar so-called “vacations” at reduced prices. I’ve avoided them myself because I don’t want to share my time with a salesperson who wants to close a sale. I also don’t want to enter into a real estate negotiation without the help of a real estate professional or attorney representing my own interests. The salesperson is representing the seller, not you, in this transaction.
No doubt you have serious buyer’s remorse because you thought you were getting a deal and that’s not what you got. Sellers list properties for more than their appraised value all the time, unfortunately. What can rescue the buyer would be a clause in the offer to purchase saying that the sale is contingent on the appraised value of the property coming in at the sale price or higher. Note: higher, not lower.
For that approach to work for you, you would have to write into the offer that the appraisal had to come in at 10 percent more than the purchase price of the property. If the salesperson provided a written guarantee that the property would appraise for 10 percent more than you paid for it, then you will want to seek the assistance of an attorney. The bait-and-switch question probably wouldn’t hold up unless there’s a state law at play that I’m not familiar with.
If you haven’t closed on the purchase of the property, you might consult a real estate attorney to explore a possible way out of the transaction. Besides the attorney’s fees, you’d have to consider any lost deposit money and fees or other expenses specified in the contract with a cancellation. That said, the damage has to be less than $90,000.
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