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What is the appraisal contingency addendum?

What is an appraisal contingency addendum? An addendum is a separate form that, once signed by the buyer and seller, becomes part of the sales contract. Appraisal contingency addendums are state-specific and allow buyers to move forward with their purchase under certain agreed-upon conditions.

Should I add an appraisal contingency?

If you are financing your home, an appraisal contingency is strongly recommended to protect yourself from a low appraisal. With it, you can walk away from the contract with your earnest money deposit or use it as a bargaining tool.

How does appraisal gap coverage work?

In the appraisal gap coverage clause, you and the seller must agree on how much you're willing to pay above the appraised value and if you want the difference split. Agree on as much as possible, putting it in writing before signing the contract to prevent stress and unnecessary renegotiations after the appraisal.

What is a home appraisal contingency?

In California, a home appraisal contingency says that if the house appraises for less than the purchase price, the home buyer can back out of the deal. More importantly, this kind of clause allows the buyer to back out without sacrificing their earnest money deposit.

What is an appraisal contingency clause?

An appraisal contingency clause is a condition built into a real estate contract that gives the buyer the right to walk away from the transaction if the appraised value of the property is lower than the agreed-upon purchase price.

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