When you are buying or selling a home, there are many things to consider. One of the most important aspects of a home sale is the purchase agreement. This legal document outlines the terms of the sale and is binding once all parties have signed it. One common contingency in purchase agreements is that they are contingent on the appraised value of the home.
A home appraisal is a professional assessment of the value of the property. It takes into account the condition of the home, its location, and recent sales of similar homes in the area. Lenders require appraisals to ensure that they are not lending more money than the home is worth. They want to make sure that if the borrower defaults on the loan, they can recoup their investment by selling the home.
Most purchase agreements include a contingency that the sale is dependent on the appraised value of the home. This means that if the appraisal comes in at or above the agreed-upon purchase price, the sale will proceed as planned. If, however, the appraisal comes in below the purchase price, the buyer may have the option to cancel the sale or renegotiate the price.
This contingency is important for both buyers and sellers. For buyers, it protects them from overpaying for a home that may not be worth the agreed-upon price. If the appraisal comes in lower than expected, the buyer can negotiate a lower price or walk away from the sale. For sellers, it protects them from accepting an offer that is higher than the home`s true value. If the appraisal comes in lower than the purchase price, the seller can renegotiate or reject the offer entirely.
It`s important to note that this contingency may not be the only one in a purchase agreement. Buyers and sellers may also include contingencies for financing, home inspection, and repairs, among others. These contingencies protect both parties and ensure that the sale proceeds smoothly.
In conclusion, most purchase agreements are contingent on the appraised value of the home. This contingency protects both buyers and sellers from overpaying or accepting an offer that is too low. It`s important to work with an experienced real estate agent or attorney to ensure that all necessary contingencies are included in the purchase agreement. By doing so, you`ll be able to navigate the home buying or selling process with confidence.
