Are you in the process of buying or selling a home? If so, you may come across the term “appraisal contingency addendum to agreement of sale.” This addendum is a crucial part of the home-buying process, as it protects both the buyer and seller in the event that the home appraisal comes in lower than the agreed-upon purchase price.
An appraisal contingency addendum is a legal document that is added to the agreement of sale between the buyer and seller. This addendum outlines the conditions that must be met in order for the sale to be completed, specifically in regards to the home appraisal.
The main purpose of this addendum is to protect the buyer. It allows the buyer to back out of the sale if the home appraisal comes in lower than the agreed-upon purchase price. This is important because if the appraisal comes in lower, the buyer may not be able to secure financing for the full amount, which could put the sale in jeopardy.
However, the seller is also protected by this addendum. If the buyer backs out due to a low appraisal, the seller has the opportunity to make adjustments to the purchase price or try to find another buyer.
It`s important to note that the appraisal contingency addendum is not automatically included in the agreement of sale. It must be added as a separate document and signed by both the buyer and seller.
In addition to protecting both parties, the appraisal contingency addendum also helps to ensure a smooth home-buying process. By outlining the conditions for the sale, it helps to prevent any surprises or disagreements that could potentially delay or derail the transaction.
In conclusion, if you are in the process of buying or selling a home, it`s important to include an appraisal contingency addendum to the agreement of sale. This addendum protects both parties in the event that the home appraisal comes in lower than the agreed-upon purchase price and helps to ensure a smooth transaction. Make sure to discuss this addendum with your real estate agent or attorney to ensure that it is included in your agreement of sale.