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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An appraisal contingency makes your offer contingent on an appraisal. What this means is let’s say you make an offer to buy a house for $350k with an appraisal contingency attached and it gets accepted. What this means is that if the appraisal comes in below $350k, then your offer basically gets automatically reduced to the appraisal amount. So let’s say it comes in ar $325k which is less than $350k, then your offer would reduce down to $325k and you’d only pay $325k for the home if the seller wishes to proceed with the transaction. If the appraisal comes in at $360k, then your offer of $350k still stands. So, it’s meant to protect the buyer from paying more than the property is actually worth.
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