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.

$995,000

5 Bedrooms
6 Bathrooms
5,748 Sq Ft
8.870 Acres

1700 N Newton St. Jasper, Indiana

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Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.

$469,000

4 Bedrooms
3 Bathrooms
3,020 Sq Ft
0.606 Acres

329 Maplecrest Boulevard Jasper, Indiana

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Listing courtesy of Trae Dauby from Dauby Real Estate.

$417,500

3 Bedrooms
5 Bathrooms
3,404 Sq Ft
1 Acres

1100 N Bluegrass Lane Jasper, Indiana

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Listing courtesy of Kevin Bayer from RE/MAX Local.

$410,000

3 Bedrooms
3 Bathrooms
2,940 Sq Ft
2.530 Acres

634 E Wright Road Jasper, Indiana

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Listing courtesy of Stacey Hurst from RE/MAX REVOLUTION.

$400,000

4 Bedrooms
2 Bathrooms
3,490 Sq Ft
0.371 Acres

307 Newton Street Jasper, Indiana

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Listing courtesy of Tama Stemle from RE/MAX Local.

$336,000

3 Bedrooms
2 Bathrooms
1,502 Sq Ft
0.344 Acres

900 Juniper Court Jasper, Indiana

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Listing courtesy of Dara O'Neil from F.C. TUCKER EMGE.

$287,500

3 Bedrooms
3 Bathrooms
2,070 Sq Ft
0.399 Acres

1622 Sugar Pine Drive Jasper, Indiana

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Listing courtesy of Kathy Rowekamp from RE/MAX Local.

$282,999

3 Bedrooms
2 Bathrooms
1,461 Sq Ft
0.436 Acres

3845 N Portersville Road Jasper, Indiana

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Listing courtesy of Arlene Kluesner from F.C. TUCKER EMGE.

$259,700

3 Bedrooms
3 Bathrooms
2,248 Sq Ft
0.264 Acres

4517 Obing Strasse Street Jasper, Indiana

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Listing courtesy of Stacey Hurst from RE/MAX REVOLUTION.

$238,000

3 Bedrooms
2 Bathrooms
2,201 Sq Ft
0.357 Acres

2603 Brosmer Street Jasper, Indiana

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Listing courtesy of Stacey Thieman-Wright from THIEMAN REALTY.

$235,000

4 Bedrooms
3 Bathrooms
2,549 Sq Ft
0.124 Acres

612 W 8th Street Jasper, Indiana

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Listing courtesy of Dara O'Neil from F.C. TUCKER EMGE.

$219,000

2 Bedrooms
2 Bathrooms
1,266 Sq Ft

901-2 Reyling Drive Jasper, Indiana

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Listing courtesy of Kara Hinshaw from Key Associates Signature Realty.

$210,000

3 Bedrooms
2 Bathrooms
1,688 Sq Ft
0.600 Acres

468 Schuetter Road Jasper, Indiana

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Listing courtesy of Daniel Hoffman from HOFFMAN & MULLEN REALTY INC.

$208,000

2 Bedrooms
2 Bathrooms
1,800 Sq Ft
0.208 Acres

891 Giesler Road Jasper, Indiana

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Listing courtesy of Kevin Bayer from RE/MAX Local.

$198,500

3 Bedrooms
1 Bathrooms
1,086 Sq Ft
0.360 Acres

4862 N US 231 Highway Jasper, Indiana

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Listing courtesy of Kevin Bayer from RE/MAX Local.

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