Contracts
A Mississippi purchase contract contains a clause stating that if the appraisal comes in below the purchase price, the buyer may:
AAutomatically terminate the contract in all cases
BTerminate or renegotiate the price, depending on how the appraisal contingency is written✓ Correct
CIncrease the purchase price by the difference
DForce the seller to reduce the price to the appraised value
Explanation
The rights triggered by a low appraisal depend on the specific language of the appraisal contingency. Common options include: the buyer may terminate and receive their earnest money back, or the parties may renegotiate the price.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA 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.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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