Contracts
Under a GAR contract, the 'appraisal contingency' protects the buyer by:
AA. Requiring the appraiser to meet the seller's asking price
BB. Allowing the buyer to terminate or renegotiate if the property appraises below the purchase price✓ Correct
CC. Requiring the seller to reduce the price to the appraised value automatically
DD. Enabling the buyer to request multiple appraisals
Explanation
An appraisal contingency allows the buyer to terminate the contract (and receive their earnest money back) or negotiate a price reduction if the property appraises for less than the contracted purchase price. This prevents buyers from overpaying relative to lender guidelines.
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