What is a Home Appraisal Contingency?

Published On: December 17, 2021|Categories: Blog, Buyers, Home Buyers, Home Sellers, Real Estate, Sellers|Tags: Home Appraisal Contingency, What is a Home Appraisal Contingency|

Whether you’re buying or selling a home in Indiana, you probably know a little bit about home appraisals. But what’s a home appraisal contingency? This guide explains.

What is a Home Appraisal Contingency?

Contingencies are conditions that a real estate agent builds into a real estate purchase contract to protect their clients. These contingencies must be met or the deal won’t go through.

In many contracts, real estate agents include a contingency about home appraisals. home appraisal contingencies say that if the home appraises too low, the buyer has the right to walk away from the deal.

What Happens When an Appraisal Comes Back Low?

When a home appraisal comes back low, it means that the appraiser doesn’t believe it’s worth the amount of money that the buyer is asking to borrow. Lenders don’t like to give more money then they have to for a home because statistically, borrowers are more likely to walk away and default on their payments when the home is worth less than they paid for it. That costs the lender a significant amount of money, and they’re stuck with a house they need to turn around and sell. as a result, the lender will most likely tell the buyer that they can borrow the home’s appraised value and not a penny more.

If an appraisal comes back low, buyers have a few options. They can ask the seller to come down on the price, come up with the remainder of the money that they can’t finance on their own, or walk away from the deal.

What Happens to a Buyer’s Earnest Money if a Home Appraises Too Low?

If a real estate purchase contract includes a home appraisal contingency, the buyer typically gets to walk away from the deal with their earnest money intact. The seller doesn’t get to keep the earnest money in that case.

$2,500,000

1895 Gun Club Road Jasper, Indiana

7 Beds 8 Baths 12,729 SqFt 10.370 Acres

Listing courtesy of Brenda Krempp from RE/MAX Local.

$719,000

938 E Jasper Dubois Road Jasper, Indiana

5 Beds 4 Baths 5,700 SqFt 6.100 Acres

Listing courtesy of Kevin Bayer from RE/MAX Local.

$597,000

3289 St Charles Street Jasper, Indiana

4 Beds 4 Baths 3,906 SqFt 0.595 Acres

Listing courtesy of Annette Wigand from ERA FIRST ADVANTAGE REALTY, INC.

$559,900

1928 S A St. Jasper, Indiana

3 Beds 4 Baths 3,376 SqFt 6.258 Acres

Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.

$535,000

4382 E 300N Jasper, Indiana

3 Beds 4 Baths 4,100 SqFt 1.900 Acres

Listing courtesy of Gina Mehringer from F.C. TUCKER EMGE.

$510,000

5070 W Alder Creek Drive Jasper, Indiana

4 Beds 3 Baths 4,208 SqFt 1.500 Acres

Listing courtesy of Stephanie Hasenour from RE/MAX Local.

$464,000

4536 W 150 N Jasper, Indiana

4 Beds 4 Baths 2,986 SqFt 1.482 Acres

Listing courtesy of Stacey Thieman-Wright from THIEMAN REALTY.

$448,900

1525 Grandview Drive Jasper, Indiana

3 Beds 3 Baths 4,132 SqFt 0.354 Acres

Listing courtesy of Stacey Thieman-Wright from THIEMAN REALTY.

$435,000

844 Second Avenue Jasper, Indiana

3 Beds 2 Baths 1,572 SqFt 0.540 Acres

Listing courtesy of Josseline Carr from RE/MAX Local.

$420,000

3237 Dogwood Drive Jasper, Indiana

3 Beds 4 Baths 4,326 SqFt 0.675 Acres

Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.

$399,900

247 N Westlin Drive Jasper, Indiana

3 Beds 3 Baths 2,849 SqFt 0.999 Acres

Listing courtesy of Annette Wigand from ERA FIRST ADVANTAGE REALTY, INC.

$399,000

836 W 20th Street Jasper, Indiana

3 Beds 3 Baths 4,376 SqFt 0.590 Acres

Listing courtesy of Elizabeth Mehringer from RE/MAX Local.

$349,900

1245 W 6th Street Jasper, Indiana

4 Beds 3 Baths 3,610 SqFt 1.300 Acres

Listing courtesy of Steve Wigand from ERA FIRST ADVANTAGE REALTY, INC.

$339,700

872 S Countryside Drive Jasper, Indiana

3 Beds 2 Baths 3,498 SqFt 2 Acres

Listing courtesy of Linda Schroering from SCHROERING REALTY.

$339,000

3255 E State Road 164 Jasper, Indiana

4 Beds 3 Baths 2,944 SqFt 1.024 Acres

Listing courtesy of Zach Holt from Whitetail Properties Real Estate.

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