Appraisal contingencies are a normal part of home buying but can be overlooked during the process. They are a standard part of real estate contracts. Once you get to the offer process and closing the deal, it is important to understand what contingencies there are and what they mean for you as a buyer.
Contingencies come into play after you have made an offer and the buyer has accepted. The contingencies protect you as a buyer and make sure that you can get a home that you can afford and that will work out for you.
There are 3 main types of contingencies. The most common one is the Home Inspection Contingency. This contingency requires that the house passes an inspection. If there are a lot of unknown issues that are uncovered, you have the option to back out of the deal. The other two contingencies have to do with money. The Appraisal Contingency requires that the home must be appraised for the sale price or higher. Your bank will send a licensed appraiser to determine the market value of the home. If the home is appraised for less than you offered and the seller will not lower the cost, you have the option to exit the deal and get your deposit back. The other contingency is the Finance Contingency. This contingency requires that you can secure a loan through the bank. It covers much of the same risks as the appraisal contingency. This contingency can be easily avoided by ensuring that you can afford the home ahead of time and get preapproval on a loan. Check out our Finance Information to help you know what you can afford.
We hope this information is a help as you navigate through the home buying process. Contingencies can be easily explained and handled by working with an Experienced Realtor.