Is an appraisal contingency good for sellers?

Appraisal contingencies could mean more opportunities for a deal to fall through. While rare, if an appraisal comes back significantly lower than the sale price, it could lead to a broken contract with a buyer.

Should I waive the appraisal contingency?

Waiving the appraisal contingency can help you stand out from other buyers. But it could also put you in a tough situation financially, since you'll agree to pay the sale price, regardless of appraised value — or force you to surrender your earnest deposit. Consider waiving the appraisal contingency ONLY if you’re confident the home won’t appraise for less or you have enough cash reserves to make up the difference.

What happens if the appraisal is lower than the offer?

Lenders rarely approve loan amounts greater than the appraised value. Typically, they’ll ask the buyer to renegotiate for a lower price. Or they’ll lend only the appraised amount, so the buyer pays the difference.

Is an appraisal contingency common?

Appraisal contingencies are nearly standard in offer letters. Buyers will typically waive the appraisal contingency for only two reasons: they’re paying in cash, or they want to be more competitive.

Steven Porrello

Contributing Writer

Steven Porrello is a former contributor at Anytime Estimate. When he's not writing about real estate and investing, Steven spends his time surfing, reading on the beach, and traveling.

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