Appraisal contingency
A contract term that lets the buyer renegotiate or cancel if the home appraises below the purchase price. It matters most when a lender bases the loan amount on the appraised value.
Also called: appraisal clause
Related terms
A condition in the contract that must be met for the sale to go forward, such as an inspection, loan approval or appraisal. If it fails within the deadline, the buyer can usually cancel and keep the earnest money.
A licensed appraiser's professional opinion of what a home is worth. Lenders require one to make sure the home supports the loan amount.
When the appraised value comes in below the contract price. The buyer may need to bring more cash, renegotiate, challenge the value, or use an appraisal contingency to exit.
A promise by the buyer to pay some or all of the difference in cash if the appraisal comes in below the price. It makes an offer stronger but means bringing more money to closing.
A contract term that lets the buyer cancel without losing earnest money if they cannot get the loan described in the contract by a set date.