An appraisal contingency protects you if the home appraises for less than your contract price. The lender will usually lend based on the appraised value, not your price.
How it works on a conventional loan
In the standard Northern Virginia form:
- The appraisal deadline is a date the parties fill in. The form recommends at least 21 days after ratification.
- If the appraisal meets the price, the contingency is satisfied.
- If it is low, you may withdraw unless the seller lowers the price.
- Each election must be made within three days after notice from the other party.
- You may also waive the contingency.
FHA and VA loans
For a low appraisal, you may proceed at the contract price, ask for a lower price, or void. The form warns that if either side fails to respond within three days of notice, the contract becomes void.
If the appraisal comes in low
- Ask the seller to lower the price.
- Split the difference, or pay the gap in cash if you can afford it.
- Walk away under the contingency, on time and in writing.
Why waiving is risky
If you waive and the appraisal is low, you may owe the gap from your own funds. Talk to your lender before you waive. See also the financing contingency.
Part of our guide to making an offer in Virginia.
Talk to Glenn and Gift before you sign
Questions about your offer or contract? Call 703-707-0334 or send us your question.
General information for Northern Virginia buyers, not legal advice. Forms are updated from time to time. Your contract controls, so read it and ask before you act.
