Home Buyer Tip: Appraisal Contingency
Make sure your offer includes an appraisal contingency.
An appraisal contingency will prevent you from having to move forward with the sale if the appraisal comes in lower than your agreed upon purchase price. For example, you agreed to pay the seller $450,000 for the home, but the appraised value only came in at $430,000. The appraisal contingency will allow you to negotiate with the seller to lower the price to the appraised value. If they refuse to lower the price, you can back out of the sale without penalty. This protects you from paying more for the home than it is really worth.