An appraisal contingency in real estate is a condition that requires the property to appraise at or above the purchase price before the sale can be completed. It is typically included in the Buy-Sell Agreement or contract and is designed to protect the interests of both the buyer and the seller.
An appraisal is a professional assessment of the value of a property, and is typically performed by a licensed appraiser. It is used to determine the fair market value of the property, which is the price that a buyer and seller would agree upon if they were both fully informed and acting in their own best interests.
If a property does not appraise at or above the purchase price, it may be worth less than the agreed-upon price, which could create a problem for the buyer if they are financing the purchase with a mortgage. If the property does not appraise at a high enough value, the lender may not be willing to lend the full purchase price, which could put the buyer in a difficult financial position.
If an appraisal contingency is included in the contract, it means that the sale is dependent on the property appraising at or above the purchase price. If the property does not appraise at or above the purchase price, the buyer may be able to renegotiate the purchase price or cancel the contract.
An appraisal contingency is an important tool for protecting the interests of both the buyer and the seller in a real estate transaction, as it helps to ensure that the sale is dependent on the property being worth at least the agreed-upon price.
Category : Lexicon