Contracts
In New Mexico, a purchase agreement that includes an 'appraisal contingency' allows the buyer to:
APurchase the property at any appraised value
BCancel the contract if the property appraises for less than the purchase price, or renegotiate with the seller✓ Correct
CRequire the seller to lower the price to appraised value
DWaive the loan requirement if the property appraises high
Explanation
An appraisal contingency protects the buyer (and lender) by allowing cancellation and return of earnest money if the property does not appraise at or above the contract price. Alternatively, the parties may renegotiate the price or the buyer may make up the difference.
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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.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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