What is an appraisal contingency?

An appraisal contingency is a provision in a purchase agreement that allows the buyer to withdraw from the transaction if the property does not appraise at or above a specified amount. This is crucial for buyers because it protects them from overpaying for a property if the appraised value does not meet the purchase price. If the appraisal comes in lower than expected, the buyer can negotiate a lower price with the seller, request repairs, or choose to walk away from the deal altogether without penalty. This contingency gives buyers leverage and decreases their financial risk, making it an important aspect of the home-buying process.

The other options do not encompass the specific function of an appraisal contingency. For instance, securing a mortgage relates more to financing rather than valuation, while conditions about a seller's financial obligations or disclosure cover different aspects of the real estate transaction entirely.