Have you ever heard of an Appraisal Contingency? Comment below ↡
Buyers, what is an appraisal contingency? Once you have put in an offer and it’s been accepted by the seller, we have a contract. Within this contract we have written a certain number of days that we have an appraisal contingency. When the contract is accepted, your Realtor contacts your lender; the one you have preapproval from and the lender orders an appraiser to come out and perform the appraisal.
The appraiser is going to determine value of the home so that the bank can provide a loan because the bank will not lend you more money than a house is worth.
Sometimes homes don’t appraise for the agreed upon sales price. As an agent, I try to warn you if I think that this is going to happen. There are two avenues that we can take if this happens. Number 1, If we knew that you overbid on the home and the appraisal does not show the same number that you offered, you have to make up for the shortage of money with your own cash. This is common when the market is a heavy seller’s market and there is bidding wars. OR number 2, the other avenue during the appraisal contingency period, we can negotiate with the seller to to lower their price to the appraised value or renegotiate the price.
All of this had to happen during the appraisal contingency period. If you can’t come to an agreement on the price that was appraised and the price on the contract and a final price, then the buyer can back out with no harm, no four, with their earnest money deposit.
I’m Casey Serafino-Lee, your local Realtor, helping you love where you live, by understanding the home buying process.
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↠Check out this video “What is an Appraisal?” https://youtu.be/QwktY23kIyI
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