Dear Real Estate Adviser,
I just discovered that the town house I wanted to buy is about 150 square feet smaller than the listed 2,045. I no longer want to proceed, based on the shrunken size. (The tax district said the place is 1,895 square feet and the appraiser said 1,900.) Can I sue the seller’s agent for misleading advertising? To top that off, my agent refuses to push for an adjusted price and she said if I walk at this stage, I’ll face legal consequences. What’s the best solution for me?
— P. Chan
Sadly, case law suggests that a buyer is obliged to verify square feet during the option period and when that period expires, the advantage falls back to the sellers, despite any, ahem, “honest mistakes” made in marketing.
In other words, this finding should have surfaced in your due diligence, assuming that period is actually over. If it isn’t, you certainly have grounds to renegotiate or cancel, but may have to hire an attorney to do so if the other party persists in trying to keep your earnest money. If the townhome, even in its foreshortened state, was still appraised for the full offer value, that’s another mark for the buyer’s side in any potential post-option dispute.
There are options to resolve it
You certainly have a right to feel ripped off since the price was negotiated as a result of the overstated space — a clearly unfair market advantage. One possible resolution could be (or could have been) a 7.3 percent adjustment to the townhome’s price, which is the percentage it fell short of the advertised size.
What does your banker think of this? If the lender declines to fund based on the shortage, you may still have your out, assuming you have a mortgage contingency in your contract. Call your banker and explain the situation if it’s not already too late. Then there’s this: The seller has already paid tax on the property based on the assessor’s 1,895-square-foot figure. So that raises the question of how that 2,045-square-foot figure got in the listing in the first place and why no one on the selling side bothered to correct it. If previous deals fell apart on this discrepancy and you can show that, you can prove it was a deception.
Complaining to the Realtor board
Realize, however, it is typically a huge challenge to sue an agent, though you can complain to his or her agency and the local Realtor board. While the National Association of Realtors Code says Realtors “shall avoid exaggeration, misrepresentation or concealment of pertinent facts relating to the property or the transaction,” any such complaint you made would at best result in a hand-slapping since boards have no power to award damages. Though you say you no longer want to buy, you might offer to move ahead at a discount in lieu of canceling or litigation if you still want the place.
Fire your agent pronto
Additionally, I’d be inclined to boot that agent as soon as possible once you sort this out, not just for failing to unearth that disparity but for apparently not working in your best interests. A real cynic, in fact, might suspect she was in cahoots with the selling agent.
Many pants are on fire
Homebuyers should take this as a lesson to research square-footage claims, property lines and the like before they advance too far in the deal. In a perfect world, no one should endure the loss of a single dime based on seller misrepresentations. But real estate can be a bruising game when unethical players are involved.
I wish you the best of luck.
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