Contracts
A buyer who makes an offer that is accepted signs a contract with an appraisal contingency. The property appraises below the purchase price. The buyer's options typically include:
ABeing required to close at the original purchase price regardless
BRenegotiating the price, paying the difference in cash, or terminating the contract✓ Correct
CSuing the appraiser for the difference
DAutomatically receiving a price reduction equal to the appraisal gap
Explanation
With an appraisal contingency, if the property appraises below the purchase price, the buyer typically can: (1) renegotiate the price with the seller, (2) pay the difference between the appraised value and purchase price in cash, or (3) terminate the contract and recover earnest money.
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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.
Math Concepts
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