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Frequently asked questions

What is an appraisal contingency?

Before most home purchases can proceed, conditions need to be metβ€”these conditions are known as contingencies. When homebuyers and sellers agree on the sale price of a home, they typically include contingencies as part of the purchase contract to give each party the option to back out if their conditions aren’t met.

An appraisal contingency protects homebuyers by allowing them to cancel their purchase contract if the home appraisal comes in lower than their offer price. Lenders typically don’t want to lendon a house that appraises lower than the contract price. So if the seller is unwilling to renegotiate the sale price of the home, and the buyer is unable to increase their cash down payment, the appraisal contingency lets buyers walk away (in many cases with their earnest money deposit back in their pocket).

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