{"id":17407,"date":"2025-11-25T02:00:06","date_gmt":"2025-11-25T10:00:06","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=17407"},"modified":"2025-11-28T06:30:55","modified_gmt":"2025-11-28T14:30:55","slug":"what-is-an-appraisal-contingency","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/what-is-an-appraisal-contingency\/","title":{"rendered":"What Is an Appraisal Contingency? Understanding This Real Estate Contract Provision"},"content":{"rendered":"

Buying and selling a home isn\u2019t as straightforward as, say, buying your groceries or shopping on Amazon. Part of the complexity of real estate transactions is that they can involve contingencies<\/a> \u2014 conditions that parties add to an agreement that have to be met before the deal can be finalized. In particular, you may be wondering: what is an appraisal contingency, and why is it important?<\/p>\n

Generally, an appraisal contingency protects a buyer when a home they\u2019ve made an offer on appraises for less than the amount the buyer offered to pay. Appraisal contingencies are just one type of contingency. Other types include a sales contingency<\/a>, financing contingency<\/a>, and inspection<\/a> contingency.<\/p>\n

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\n \"homelight\n <\/div>\n \n

Price Your Home to Minimize the Chance of a Low Appraisal<\/h3>\n

Our Home Value Estimator is a great starting point, and we’ll send you a detailed analysis of your home’s value based on local housing market data.<\/p>\n \n

\n Get Estimate<\/a>\n <\/div>\n <\/div>\n<\/div>\n\n
<\/div><\/p>\n

First, what is an appraisal?<\/h2>\n

A home appraisal<\/a> is a professional determination of a home\u2019s value. A licensed appraiser<\/a>, who is trained in the field, will evaluate a house and take several factors into consideration<\/a> when calculating the appraised value. They will likely look into comparable homes (or comps<\/a>), the size of the lot, new upgrades, and the location. After appraisal, the buyer should receive an appraisal report in about a week<\/a>.<\/p>\n

Banks and mortgage lenders<\/a> use the appraised value to determine the highest mortgage amount they are willing to loan a borrower, to ensure that they are not financing an overvalued asset.<\/p>\n

Special situations<\/h3>\n

All-cash buyers will not have to get an appraisal since there is no mortgage lender involved, although they can opt to coordinate for one. Additionally, buyers with FHA<\/a> and VA<\/a> loans are required to get an appraisal, which must meet certain standards set by the government.<\/p>\n

Appraisal example<\/h3>\n

Let\u2019s say a house lists for $200,000, but in a hot market, the seller accepts an offer of $300,000. However, the appraised value comes in lower<\/a> at $250,000. That creates a $50,000 overage \u2014 or appraisal gap \u2014 that the lender will not provide funds for. To move the deal forward, the seller and buyer will need to renegotiate.<\/p>\n

In this event, the buyer can increase the amount of money they put down, the seller can reduce the price, or the parties can meet somewhere in the middle. The appraisal contingency allows the buyer to exit the contract and receive their earnest money should the home not appraise or if the seller won\u2019t agree to a new arrangement. Without an appraisal contingency, the buyer could still walk away but would likely sacrifice their earnest money in the process.<\/p>\n","protected":false},"excerpt":{"rendered":"

The appraisal contingency is a contract provision that allows buyers to back out of a purchase agreement if their home appraises below their offer amount.<\/p>\n","protected":false},"author":262,"featured_media":47859,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[242,322],"tags":[491,766],"class_list":["post-17407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-appraisals","category-logistics","tag-basics","tag-what-does-contingent-mean-in-real-estate"],"acf":[],"yoast_head":"\nWhat Is an Appraisal Contingency and When Does a Buyer Need It?<\/title>\n<meta name=\"description\" content=\"The appraisal contingency is a contract provision that allows buyers to back out of a purchase agreement if their home appraises below their offer amount.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.homelight.com\/blog\/what-is-an-appraisal-contingency\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is an Appraisal Contingency? 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