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!
In: 1
So… The sale price of the house is $1 million. You offer to pay $1 million. You need to get a mortgage. Before the bank will give you the mortgage, they go see how much they think the house is worth. This is because if you stop making payments they will take the house and sell it to get their money back. So they want to make sure they don’t lend you more than it is worth.
Appraisal contingency says if you offered $1 million and the bank thinks it is only worth $500k, you can get out of the contract to buy.
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