Contracts
A Maryland sales contract includes an appraisal contingency. If the home appraises at $20,000 below the purchase price, the buyer may:
AOnly cancel the contract
BCancel the contract, renegotiate the price, or waive the contingency and proceed✓ Correct
CRequire the seller to reduce the price automatically
DSue the appraiser
Explanation
An appraisal contingency gives the buyer the right to cancel, renegotiate the price to the appraised value, or waive the contingency and proceed at the contracted price.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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