What Is An Appraisal Contingency?
We get a lot of questions about Real Estate in Santa Clarita. This week we’re answering your question what is an appraisal contingency?
A: When purchasing a home, a licensed appraiser will come to the property and appraise the home. A home appraisal is an estimate of the property’s value, which takes into consideration factors like location and condition of the house, as well as the recent sales of similar homes in the area. This is an extremely important part of the home buying process because the value determined by the appraiser is the maximum amount that can be loaned out by a mortgage company.
For example, if you are purchasing a home for $450,000 but the appraisal values the home at $440,000 the bank will only finance the appraised amount. In this instance, as a buyer, you have a few options. You can choose to pay the additional $10,000 to meet the agreed to price in the purchase agreement. You also may negotiate with the sellers to drop the price of their home. Sellers may or may not be willing to do this. If you are within your appraisal contingency (typically 21 days) you as a buyer have the right to cancel escrow and get your deposit back if the seller is unwilling to drop the sales price, or you are unable to bring in additional funds. If you have already removed your appraisal contingency and cannot come to an agreement with the sellers you may lose your deposit.
Working with an experienced agent is very important when it comes to the negotiation process when buying or selling a home. If you are considering entering the real estate market connect with us here, or at 661-505-1051.