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If that appraisal comes in under the agreed-upon sales price? Your home sale might collapse. That's because the buyers' lender won't loan them more than what an appraiser says your home is worth. It's why home sellers rightly fear the prospect of a low appraisal.

Real estate expert opinion is generally against the idea of paying more than than a property's appraised value. Even if you make up the difference on an under-appraised property, you'll have a property worth less than what you paid.

HOW LONG IS A NORMAL APPRAISAL CONTINGENCY? Typically, we recommend 21 days for an appraisal contingency for conventional loans as mentioned above for FHA and VA loans automatically build this contingency into the financing contingency. The timeline can be shorter if your lender is able to do a rush order.

Contingencies should be written in full sentences, Marks says. In this case, it should have read, 'This agreement is contingent, at buyers' option, on the property appraising for at least $620,000 as determined by the appraiser for the buyers' lender,' he says. There's no confusion in that language.

If there is a cash buyer who is able to purchase the property outright, an appraisal contingency isn't necessary unless the buyer wants to confirm they aren't paying more than the property is worth. Waiving the contingency could also strengthen the offer and beat out the competition on an in-demand property.

A contingency period typically lasts anywhere between 30 and 60 days. If the buyer isn't able to get a mortgage within the agreed time, then the seller can choose to cancel the contract and find another buyer. This timeframe may be important if you encounter a delay in getting financed.

Specifically, an appraisal contingency means that if your home doesn't appraise for the amount you've agreed to pay, you can walk away from the deal with your deposit.An appraisal determines the fair market value of the home you'd like to buy. ... That deposit goes toward your down payment if the seller accepts your offer.

Most sales contracts today have an addendum that allows the buyers to back out of the deal if the property doesn't appraise at contract price without penalty and get their earnest money deposit back. If the sellers decide not to renegotiate, the deal is canceled and the buyers start looking for another home.