Appraisal Contingency is a real estate term you will encounter when buying or selling a home in Ventura County. This page gives you a plain-English definition and explains why it matters.
What it means
Lenders will only finance up to a percentage of the appraised value, so a low appraisal can create a gap the buyer must cover in cash. With an appraisal contingency in place, the buyer can ask the seller to lower the price, bring extra cash, or cancel and recover the earnest money deposit. The contingency has a deadline by which the buyer must act.
Why it matters to buyers and sellers in Ventura County
In Ventura County, where bidding can push prices above prior comparable sales, low appraisals do happen. Buyers waiving the appraisal contingency to win a bid should be prepared to cover any shortfall in cash. Sellers evaluating offers weigh appraisal-contingency terms when judging how likely a deal is to close.
Frequently Asked Questions
What happens if the home appraises low?
With an appraisal contingency, you can renegotiate the price, pay the difference in cash, or cancel and recover your deposit. Without it, you may be obligated to make up the gap.
Should I waive the appraisal contingency?
Only if you can cover a possible shortfall in cash. Waiving it can strengthen an offer but increases risk if the appraisal comes in low.
Who pays for the appraisal?
The buyer typically pays for the lender-ordered appraisal as part of closing costs.
