Finance
A Connecticut lender 'red flags' a loan application because the property appraised for $20,000 less than the purchase price. This is known as an 'appraisal gap.' The options include:
AThe lender automatically cancels the loan
BThe buyer can renegotiate, pay the gap, or exit if there is an appraisal contingency✓ Correct
CThe seller is required to reduce the price
DThe transaction closes at the appraised value automatically
Explanation
When an appraisal comes in below the purchase price, lenders will only lend based on appraised value. The buyer must either renegotiate the price, cover the gap with cash, or use the appraisal contingency to exit.
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