Home Selling Team
Sue Esposito, Home Selling TeamPhone: (860) 428-3201
Email: [email protected]

What is an appriasal contengiency?

by Sue Esposito 06/05/2024

Once a home seller has accepted an offer to purchase their property, the end of the home selling journey may feel close. 

However, the mortgage lender of the homebuyer may appraise the property for a lower amount than the purchase price. If this happens, it’s vital to examine the terms of the appraisal contingency in the purchase contract. 


Are appraisal contingencies common?

Contingencies are put in place to protect both buyers and sellers in real estate exchanges. An appraisal contingency is very common to find on the buyer’s side of the purchase agreement. It protects homebuyers if their lender's appraisal comes back lower than the amount needed to purchase the home. 


Why would a seller not want an appraisal contingency?

Dropping an appraisal contingency clause can be very beneficial to home sellers, as it increases the chances of the purchase decision going through. 

This option can be tricky for homebuyers as it leaves them unprotected if the appraisal comes back lower than expected, but may make their offer more appealing in a competitive seller’s market.  


Can a seller back out after a low appraisal?

If the appraised value of a home is less than the listing price, the seller has the option to back out of the deal if they feel they would end up losing money. 

The seller doesn’t have to lower the price, however, if the homebuyer has an appraisal gap guarantee, they have agreed to cover the balance with their own funding if the appraisal comes back low. 

Working with your real estate agent, home buyers and seller’s can create and examine the appraisal contingency to make sure it’s best fitting their home selling and buying standards.


About the Author
Author

Sue Esposito

There are many qualities and skills that go into being an excellent real estate professional - integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills and a high-quality professional network, all of which are hallmarks of how I work.

  • Full Time Real Estate Professional with an excellent work ethic
  • 32 years of real estate experience working with a diverse client base of both buyers and sellers
  • Certified Real Estate Negotiation Expert
  • Passionate about the Real Estate profession and advancing education and skills
  • Proficient with technological advances in marketing strategies
  • Employs a Full Time Licensed Real Estate Listing and Transaction Manager
  • My Designations include Broker, ABR, CNE, CRS, GRI, MRP, SFR, and SRS. 
  • Licensed in CT