Considering Waiving the Appraisal Contingency? Here’s What to Know
Appraisal contingencies protect buyers from low appraisals but might be beneficial to waive in a competitive real estate market.
You’ve just found your dream home and are finalizing your offer when your real estate agent calls with concerning news. There are two other offers going in on the property. To sweeten your offer, you may be considering waiving the appraisal contingency, promising not to walk away from the deal if the appraisal comes in below your offer price.
Loosening the stipulations in a contract can make your offer much more attractive. As of December 2024, 18% of buyers waived the appraisal contingency, with other buyers waiving, for example, inspection contingencies to likewise make their offers more enticing to sellers.
The appraisal contingency is there to protect the buyer in case of any issues surrounding your appraisal. Taking it out of your contract may make your offer pop and put you ahead of your competition. However, this approach can be risky. Not all purchases are the same, and waiving an appraisal contingency without doing your due diligence first may cost you more money down the line.
Find a Top Agent With Experience in Contingency Offers
If you need to make an offer on a home with contingencies, you’ll want a top agent by your side who can avoid pitfalls and secure the home you want. We analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.
So how do you know if it’s right for you? We’ve consulted with top real estate experts with decades of experience to explain what an appraisal contingency is, how it comes into play, what options you have when a home appraises below the offer price, and whether it’s best to bake an appraisal contingency into your real estate contract.
What is a contingency?
You’ve most likely heard the term contingency thrown around quite a bit. But what exactly does it mean? Well, according to Florida real estate agent Damian Costantino, a contingency is a stipulation written into the purchase contract that needs to be met or resolved before moving to the closing table. Essentially, it’s a condition the buyer or seller has to clear up before the sale can continue. There can be any number of contingencies in your real estate contract, but here are some common ones (besides appraisal contingencies, which we’ll discuss more below):
- Inspection contingency: A buyer requests a home inspection and may use the results to negotiate a better deal or walk away.
- Financing contingency: The buyer must qualify for a mortgage loan and receive financing for the deal to continue.
- Home sale contingency: Buyer’s purchase is dependent on the sale of their existing home.
- Title contingency: The sale of the home is contingent on the title search showing no issues or concerns.
