The Importance of the Real Estate Contract Appraisal Contingency Clause
As a real estate enthusiast, I have always been fascinated by the various clauses and provisions that can make or break a real estate contract. One such clause that has caught my attention is the appraisal contingency clause. This often overlooked clause can have a significant impact on the outcome of a real estate transaction.
Understanding the Appraisal Contingency Clause
appraisal contingency clause provision real estate contract allows buyer back deal property appraise specified amount. Other words, appraisal comes lower agreed-upon purchase price, buyer option renegotiate price walk away deal penalties.
This clause provides layer protection buyer, ensuring not overpaying property. Also serves safeguard lender, helps ensure property worth amount loan.
Importance of the Appraisal Contingency Clause
According to the National Association of Realtors, in 2019, 12% of real estate contracts had issues related to the appraisal process. This statistic highlights the significance of the appraisal contingency clause in real estate contracts.
Let`s take a look at a case study to illustrate the importance of this clause. In a recent transaction, a buyer had included an appraisal contingency clause in the contract. Appraisal came $20,000 lower purchase price, buyer able either negotiate lower price seller walk away deal. Clause saved buyer overpaying property provided peace mind.
Ensuring a Strong Appraisal Contingency Clause
When including an appraisal contingency clause in a real estate contract, it is crucial to ensure that the language is strong and clear. Clause specify appraisal amount buyer seeking actions taken appraisal falls short.
The appraisal contingency clause is a critical component of a real estate contract, providing protection for both buyers and lenders. Understanding the importance of this clause can help ensure a smooth and fair real estate transaction for all parties involved.
Top 10 Legal Questions about Real Estate Contract Appraisal Contingency Clause
|1. What Real Estate Contract Appraisal Contingency Clause?
|Real Estate Contract Appraisal Contingency Clause provision purchase agreement allows buyer back deal property appraise agreed-upon purchase price. This clause provides protection for the buyer in case the appraisal comes in lower than expected.
|2. Is the appraisal contingency clause commonly used in real estate contracts?
|Absolutely! The appraisal contingency clause is a standard feature in most real estate contracts. Gives buyer opportunity renegotiate purchase price walk away deal property appraise above agreed-upon price.
|3. Can the buyer waive the appraisal contingency clause?
|Yes, the buyer has the option to waive the appraisal contingency clause if they are confident in their ability to secure financing regardless of the appraisal results. However, it is important for the buyer to carefully consider the risks before waiving this contingency.
|4. Happens property appraises less purchase price?
|If the property appraises for less than the purchase price and the buyer has an appraisal contingency in place, they can either negotiate with the seller to lower the purchase price, request a second appraisal, or walk away from the deal without penalty.
|5. Can the seller cancel the contract if the property appraises for less than the purchase price?
|No, seller cancel contract solely property appraises less purchase price. However, the seller may choose to negotiate with the buyer to find a mutually agreeable solution.
|6. Are there any time limits associated with the appraisal contingency clause?
|Yes, the appraisal contingency clause typically includes a specific timeframe within which the appraisal must be completed and any issues must be addressed. Crucial buyer seller adhere deadlines avoid complications.
|7. Can the buyer use the appraisal contingency as a negotiating tool?
|Absolutely! If the property appraises for less than the purchase price, the buyer can leverage the appraisal contingency to negotiate a lower purchase price or request repairs or improvements to bring the property value in line with the agreed-upon price.
|8. What if the property appraises for more than the purchase price?
|If the property appraises for more than the purchase price, it is generally good news for the buyer as it validates the property`s value. However, the buyer can still choose to negotiate with the seller based on the appraisal results.
|9. Can the appraisal contingency be added after the initial contract is signed?
|Yes, it is possible to add an appraisal contingency to the contract as an addendum after the initial agreement is signed. However, parties must consent addition valid.
|10. What concerns appraisal contingency clause?
|If you have any concerns about the appraisal contingency clause or its implications, it is advisable to seek guidance from a qualified real estate attorney. They can provide you with personalized advice and ensure that your interests are protected throughout the real estate transaction.
Real Estate Contract Appraisal Contingency Clause
This agreement is made and entered into on this [date] by and between the seller, [Seller Name], and the buyer, [Buyer Name], for the purchase and sale of real property located at [Property Address].
|1. Appraisal Contingency
|1.1 The Buyer`s obligation to purchase the Property is contingent upon the Property appraising for at least the purchase price. If the Property does not appraise for the purchase price, the Buyer may terminate this contract and receive a refund of the earnest money deposit.
|1.2 The Buyer shall have [number] days from the effective date of this contract to obtain an appraisal of the Property at Buyer`s expense.
|1.3 If the Property does not appraise for the purchase price, the Buyer must provide written notice of the appraisal results to the Seller within the specified timeframe in order to exercise the right to terminate this contract.
|1.4 If the Buyer fails to provide written notice of the appraisal results within the specified timeframe, the Buyer shall be deemed to have waived the right to terminate this contract based on the appraisal contingency.
IN WITNESS WHEREOF, parties hereto executed Real Estate Contract Appraisal Contingency Clause date first above written.