Under the TREC Third Party Financing Addendum, a buyer applies for a conventional loan but is denied because of a low appraisal. The contract price is $300,000 but the property appraised at $275,000. Under the addendum, the buyer may:
Correct Answer
A) Terminate the contract if the buyer cannot obtain financing approval within the specified time period
Under the Third Party Financing Addendum, if the buyer cannot obtain financing approval (which includes appraisal requirements) within the specified period, the buyer may terminate the contract and receive the earnest money back. A low appraisal that prevents loan approval is a basis for termination.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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