Can someone explain to me an appraisal contingency and how and when to use it?
A realtor friend of mine explained it to me, but it went completely over my head as I’m in the planning stages of buying a home. Thank you!
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It’s a part of an agreement to buy a house that lets you cancel the purchase if the appraisal doesn’t match the agreed upon price. When you buy a house, the lender will send an appraiser to make the sure the house (their collateral) is worth what you are paying for it. If it doesn’t match, you have to either come up with a larger down payment so bank is still only funding the original percentage, get the seller to drop the price to the appraisal, or cancel the purchase.
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