The Appraisal Contingency – What Does This Mean?

Home buyers and sellers on the Central Coast are keenly aware that Short Sales and bank owned properties have put downward price pressure on housing prices.  Although these sales are quickly coming to an end, and the market is quickly beginning to stabilize, the carry over effects of the short sales still remain when appraisals are conducted.  As such, some homes may have appraisal values below the asking price.   Because banks will rarely lend more than the amount of the appraisal, a potential “funding gap” is often the result.   Some sellers, in a move to circumvent the issue may require buyers to remove the “appraisal contingency” which means that if the appraisal is less than the asking price, the buyer must cover the difference with cash.