What is an Appraisal Contingency?
If the offer has an appraisal contingency, the buyer will purchase the house ONLY IF the house appraises at the offer price. So, the buyer will pay for an appraiser to inspect and write a report on the home’s value.
An appraisal contingency is reasonable because it protects the buyer if the house does not appraise at the offer price.
In our example, we have a list price of $1,000,000. So, the seller hopes that the appraised value is $1,000,000 or higher. Let’s say it appraises right at $1,000,000. The seller is happy, the buyer is happy, and the appraisal contingency can now be removed.
At this point, the buyer signs a form to remove that contingency from the offer and proceed with the sale.
But, wait! What happens if the listing does NOT appraise at the offered price? The contingency is the safety net. In this case, the buyer …