When buying a home, the contingencies included in the purchasing agreement can offer significant protection. An appraisal contingency, for example, is particularly important in a market such as this, as home prices are wildly inflated, making it difficult for many Massachusetts residents to afford to purchase real estate. Why have an appraisal contingency?
What does it do?
This contingency can give buyers the right to walk away if the home fails to appraise at their offer price — or at least gives them room to negotiate the price further with the seller. Truth be told, many people are willing to pay over the appraised value to get their hands on homes, but not everyone can afford to do that. If a home appraises for less than the offer amount, without an appraisal contingency, the buyer has to come to closing with extra cash to pay the difference. Some people can do this, but others can’t.
Having an appraisal contingency also protects a buyer’s earnest money. If the appraisal comes in low and a buyer opts to walk away, they won’t lose their earnest money for doing so. Again, it saves the buyer money in the end if things don’t work out as expected.
Massachusetts residents who don’t care about the appraisal value don’t need to worry about adding an appraisal contingency. It all comes down to the buyer’s choice and what the buyer is willing to do to get a home. For those who only have so much out-of-pocket money to spend, an appraisal contingency is a wise thing to have. An experienced real estate law attorney can provide more information about this and other available contingencies that buyers may want to include when submitting purchasing agreements.