What is An Appraisal Contingency and How Can it Impact Your Homebuying Journey?

Dusty Rhodes • July 3, 2023

Are you a first-time homebuyer? Or are you a seasoned buyer looking to upgrade or downsize your living space? Regardless of your experience, navigating the housing market can be daunting, especially when it comes to understanding the complex jargon and legalities involved in purchasing a property. One important concept that all homebuyers should be familiar with though is the appraisal contingency. In this guide, we will explore what an appraisal contingency is and how it can impact your homebuying journey.


What is an appraisal contingency?


An appraisal contingency is a clause in a real estate contract that allows the homebuyer to back out of the transaction or renegotiate the terms of the sale if the property appraisal comes in lower than the agreed-upon purchase price.


When a buyer applies for a mortgage to purchase a home, the lender requires an appraisal of the property to determine its fair market value. If the appraisal comes in lower than the agreed-upon purchase price, the buyer may not be able to obtain financing for the full amount, and may have to pay the difference out of pocket or renegotiate the terms of the sale.


With an appraisal contingency in place, the buyer can protect themselves from being obligated to pay more than the fair market value of the property. If the appraisal comes in lower than the purchase price, the buyer has the option to back out of the sale without penalty or renegotiate the terms of the sale to reflect the appraised value.


What is a contingent offer?


A contingent offer is a type of offer made by a buyer to purchase a property that is contingent upon certain conditions being met. These conditions typically relate to the sale of the buyer’s current property, securing financing, passing a home inspection, or the home being appraised reflects fair market value.


For example, a buyer might make a contingent offer on a property they want to purchase, but the offer is contingent upon the sale of their current home. If their home sells within a specified period, the contingent offer becomes a firm offer and the sale proceeds as planned.


How does an appraisal contingency work?


An appraisal contingency states that the sale of the property is contingent upon the property being appraised for a certain value. Here’s how it works:

  1. The buyer and seller agree on a purchase price for the property.
  2. The buyer has a professional appraiser evaluate the property to determine its value. The appraiser considers factors such as the property’s size, location, condition, and recent comparable sales in the area.
  3. If the appraised value of the property is equal to or higher than the purchase price agreed upon by the buyer and seller, then the contingency is satisfied, and the sale can proceed as planned.
  4. If the appraised value of the property is lower than the agreed-upon purchase price, then the buyer has several options, such as:
  • Negotiate with the seller to lower the purchase price to match the appraised value.
  • Request that the seller make repairs or upgrades to the property to increase its value.
  • Walk away from the sale altogether, as the contingency allows them to do so without penalty.


An appraisal contingency is important because it protects the buyer from overpaying for a property that is not worth the purchase price. It also provides a way for the buyer to renegotiate or back out of the sale if the property is appraised at a lower value than expected.


Difference between the appraisal contingency and a finance contingency 


An appraisal contingency and a finance contingency are two common types of contingencies included in a real estate purchase agreement. Here are the key differences between them:

  • Definition: An appraisal contingency is a clause in a real estate purchase agreement that makes the sale of the property contingent upon the property’s appraised value meeting or exceeding a certain amount. A finance contingency, on the other hand, is a clause in a real estate purchase agreement that makes the sale of the property contingent upon the buyer obtaining financing to purchase the property.
  • Purpose: The purpose of an appraisal contingency is to protect the buyer from overpaying for the property. Whereas, the purpose of a finance contingency is to protect the buyer from being contractually obligated to purchase the property if they are unable to secure financing. 
  • Timing: An appraisal contingency is typically included in the initial purchase agreement and is usually resolved during the inspection period. A finance contingency is also typically included in the initial purchase agreement and is resolved once the buyer has secured financing, which may take several weeks.


What happens when the house appraises for less than your offer?


If the house appraises for less than the offer, it means that the appraised value of the property is less than the agreed purchase price. This situation can have several consequences, including:

  • Renegotiation of the purchase price: If the house appraises for less than the offer, the buyer can negotiate with the seller to reduce the purchase price to match the appraised value. If the seller agrees to reduce the price, the buyer can proceed with the purchase.
  • Additional down payment: If the buyer still wants to purchase the property at the agreed price, even though the appraisal value is less, the buyer may need to make a larger down payment to compensate for the shortfall in the appraised value. This is because the lender will only provide a mortgage loan up to the appraised value of the property.
  • Cancelation of the deal: If the seller is not willing to renegotiate the purchase price, and the buyer is unable or unwilling to make a larger down payment, the deal may be canceled. This can be frustrating for both parties, as it means that the transaction cannot proceed as planned.


It’s important to note that a low appraisal is not always a deal breaker. If the buyer and seller are willing to work together to find a mutually acceptable solution, they may still be able to proceed with the purchase.


Appraisal contingency example


Here’s an example of how an appraisal contingency might be used in a real estate transaction:


Bob is interested in buying a house in Las Vegas that is listed for $400,000. He makes an offer of $400,000, and the seller accepts his offer. However, before the sale can go through, the property must be appraised to ensure that the purchase price is fair and reasonable.


If the appraisal comes back and values the property at $380,000, Bob has the option to either:

  1. Walk away from the deal and receive his earnest money deposit back.
  2. Negotiate with the seller to lower the purchase price to match the appraised value.
  3. Agree to pay the original purchase price even though the property was appraised for less.


In this scenario, Bob has the protection of an appraisal contingency, which allows him to back out of the deal or renegotiate the price if the property doesn’t appraise for the agreed-upon amount.


What is an appraisal gap clause?


An appraisal gap clause is a provision in a real estate contract that addresses the difference between the appraised value of the property and the purchase price agreed upon by the buyer and seller.


When a buyer obtains financing to purchase a property, the lender will also require an appraisal to ensure that the property is worth the amount of the loan. In a competitive real estate market, a buyer may offer to pay more than the appraised value of the property in order to secure the purchase. In this case, an appraisal gap clause can be included in the contract to address the potential difference between the purchase price and the appraised value.


The clause may state that if the appraised value comes in lower than the purchase price, the buyer will be responsible for paying the difference out of pocket, up to a certain amount. Alternatively, the clause may allow the buyer to back out of the contract or renegotiate the purchase price if the appraised value is significantly lower than the agreed-upon price.


An appraisal gap clause is designed to protect both the buyer and the seller by providing a clear understanding of how to proceed if the appraised value differs from the purchase price.


When should I use or waive an appraisal contingency?


Here are some factors to consider when deciding whether to use or waive an appraisal contingency:


Use an appraisal contingency when:

  1. You are obtaining financing: If you are obtaining financing to purchase the property, the lender will typically require an appraisal to determine the value of the property. 
  2. The property is unique: If the property is unique and there aren’t many comparable properties to use for the appraisal, it may be wise to include an appraisal contingency to protect yourself in case the appraiser values the property lower than the purchase price.
  3. You are concerned about overpaying: If you are concerned that you may be overpaying for the property, including an appraisal contingency can give you an out if the property doesn’t appraise for the purchase price.


Waive an appraisal contingency when:

  1. You are a cash buyer: If you are a cash buyer and don’t need financing to purchase the property, you may consider waiving the appraisal contingency. In this case, you would be assuming the risk that the property won’t appraise for the purchase price, but if you are comfortable with that risk, waiving the contingency can make your offer more attractive to the seller.
  2. The property is in high demand: If the property is in a highly competitive market and there are multiple offers, waiving the appraisal contingency can make your offer more competitive. However, be aware that if the property doesn’t appraise for the purchase price, you may be responsible for making up the difference in cash.
  3. You are confident in the value: If you have done your own research and are confident that the property is worth the purchase price, you may consider waiving the appraisal contingency. However, be aware that if the property doesn’t appraise for the purchase price, you may again be responsible for making up the difference in cash.


What determines the appraisal value of a home?


The appraisal value of a home is determined by a licensed appraiser who evaluates various factors such as:

  1. Property characteristics: The appraiser considers the square footage of the property, the number of bedrooms and bathrooms, the age of the property, and any unique features such as a pool or fireplace.
  2. Location: The appraiser looks at the location of the property, including the neighborhood, nearby amenities, and school district.
  3. Comparable properties: The appraiser compares the property to recently sold properties in the area that are similar in size, age, and features to determine a fair market value.
  4. Condition of the property: The appraiser evaluates the condition of the property, including any needed repairs or updates.
  5. Market trends: The appraiser considers market trends and economic conditions that may affect the value of the property.
  6. Zoning and use restrictions: The appraiser takes into account any zoning or use restrictions that may affect the value of the property.


All of these factors are taken into consideration by the appraiser to determine the fair market value of the property. The appraisal value is important in determining the maximum amount a lender is willing to finance and helps the buyer and seller negotiate a fair price for the property.


What are other types of real estate contingencies?


There are several other types of real estate contingencies that buyers may include in their purchase contracts to protect themselves. Here are some common types of contingencies:

  1. Financing contingency: This contingency allows the buyer to back out of the transaction if they are unable to secure financing to purchase the property.
  2. Inspection contingency: This contingency allows the buyer to have a professional home inspection conducted to identify any issues with the property. If significant issues are found, the buyer can negotiate repairs or back out of the transaction.
  3. Title contingency: This contingency allows the buyer to back out of the transaction if there are issues with the property’s title, such as liens or disputes over ownership. 
  4. Home sale contingency: This contingency is used when the buyer needs to sell their current home before purchasing the new property. If the buyer is unable to sell their home, they can back out of the transaction.


Including these contingencies in the purchase contract can give the buyer more protection and flexibility during the transaction. However, it’s important to note that including too many contingencies can make the offer less attractive to the seller, so buyers should consider which contingencies are most important to them.


FAQs about appraisal contingencies


Is there an appraisal contingency deadline?

The appraisal contingency deadline is negotiated between the buyer and seller and is typically set at 7 to 10 days after the appraisal is conducted. If the buyer misses the deadline, they may lose their right to terminate the contract based on the appraisal results. It’s important to understand and meet all the deadlines in the contract with the help of a real estate agent or attorney.


How long is an appraisal good for?

Appraisals are typically considered valid for 120 days (4 months) from the date of the report, but the validity period can vary depending on the type of loan and the lender’s requirements. Government-backed loans may have a longer validity period of up to 180 days (6 months). However, market conditions and other factors can affect the value of the property over time, so the appraisal is only a snapshot of the property’s value at a specific point in time.


Can a seller back out if the appraisal is high?

It’s rare for a seller to back out of a transaction because the appraisal value is high. Generally, once the purchase agreement is signed, the seller is legally bound to sell the property to the buyer at the agreed-upon price, regardless of the appraisal value. However, there may be some exceptions depending on the terms of the contract and state laws. Buyers and sellers should review the purchase agreement carefully and consult with a real estate agent or attorney if they have concerns.


Who pays for an appraisal?

In a typical home purchase transaction, the buyer is responsible for paying for the appraisal as part of their closing costs. However, in some cases, the seller may agree to pay for the appraisal. 


How long does an appraisal take?

The timeframe for an appraisal can vary depending on factors such as the size and complexity of the property, the appraiser’s workload, and local market conditions. Generally, the appraisal process can take anywhere from a few days to a few weeks.


How much does an appraisal cost?

The cost of an appraisal varies depending on the location, size, and complexity of the property, but it typically ranges from a few hundred dollars to several hundred dollars.





Source: Redfin

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How to Thrift Your Entire Christmas, According to People Who Do It Every Year

By Dusty Rhodes • December 15, 2025
With a new crop of trendy gifts debuting each year, it's easy to be convinced that the latest is always the greatest. But if you ask a growing number of thrifters, what’s old is new. Megan Bannister , a Des Moines, Iowa-based writer and the owner of Olio Oddities (a home store with curated thrifted finds), has been thrifting "for as long as I can remember. I’ve made it a regular part of my gifting routine for the past 5 or 6 years." She’s in good company with lifelong thrifter Grace Kraemer , a Chandler, Arizona-based content creator and social media strategist known as @ thatgenzwife on TikTok, and Bre Eggert, the Milwaukee, Wisconsin-based content creator and thrifting expert behind Average But Inspired . All three are passionate Thriftmas shoppers. They swear that it’s the solution to save money, waste, and share personal, memorable presents with those they love. Read on for a primer to all things Thriftmas, plus all of their best secrets if you’d like to follow suit. What Is Thriftmas? Thriftmas promotes the idea that "secondhand gifts are completely appropriate and beautiful presents to both give and receive," Eggert explains. "This movement is based on the idea that there is already plenty of 'stuff' in the world, whether that's giftable items or holiday decor," Bannister adds. So instead of shopping for new holiday gifts at big box stores or online, with Thriftmas, you are consciously making investments in previously-loved gems that feel "intentional and special," according to Kraemer, but are markedly more sustainable, unique, and often more budget-friendly. Why December Is the Perfect Time to Thrift Gifts Vintage finds have long held appeal, so you might be wondering, 'why is Thriftmas having such a moment?' Kraemer believes it’s related to two major factors: " Budgets are tight for a lot of families, so buying the latest and greatest new thing this holiday season just isn’t an option for a lot of people," she says. "Plus, I think that many of us are also realizing how much overconsumption rears its ugly head this time of year." Compared to the other 11 months of the year, sustainability experts estimate that Americans produce about 23% more waste in December, with a large portion of that related to the packaging required for online purchases . ”Thriftmas gives mindful shoppers an affordable alternative to the hustle and bustle of keeping up with the latest holiday shopping trends,” Kraemer says, while offering the opportunity to share a one-of-a-kind find that will warm the heart of the recipient. Even if you’ve made your list and checked it twice, Thriftmas can still be part of the strategy this year — and it’s easy to implement if you follow these tips from the pros. Set a Budget Before you step foot into any thrift stores, Kraemer recommends setting a rough budget for how much you plan to spend on each person. Consider tacking on a bonus fund to account for any discoveries that are perfect for a specific person but slightly over their allocated limit. (You might find something much less expensive than expected for another individual, too, offering natural balance.) "The great thing about thrifting is that you're often able to stretch your budget further than you would through traditional gifting. Since you're more likely to be putting together a collection of items when thrifting, a budget range gives you some room to pair bigger items with smaller, more budget-friendly finds," Bannister says. Keep the Recipient Top of Mind Even the most epic Thriftmas find will be a flop if it doesn’t speak to the individual who unwraps it. Above all else, keep in mind the person you’re buying a gift for and whether or not they will appreciate an item, Kraemer advises. "There is something so special about combing through items in a thrift store and finding a piece that instantly reminds you of a specific person. Gifting that item shows the person that you pay attention to the things they like and that you specifically thought of them when you stumbled upon the piece," Kraemer adds. This shows the thought that went into it, instead of just checking a name off a shopping list, Eggert agrees. Their passions might be able to help direct your shopping stops, too. For friends who love to hike, for instance, Bannister visits shops she knows stick vintage National Parks memorabilia, maps and postcards. For her pet-loving pals, Bannister searches for stores with ceramic pieces, vintage art or even dishware that feature animals similar to the beloved furry friend. Be Willing to Change Course As important as it is to maintain focus on what might be the perfect fit for your sister or best friend, it’s extremely challenging to shop according to a fixed list. "When it comes to thrifting for holiday gifts, I've found it's important to have an idea in mind, but be willing to pivot. Unless you've got lots and lots of time to spend searching, having something super specific in mind, is going to make your shopping experience more difficult," Bannister notes. Have a general idea of what you'd like to give (think: sports memorabilia or a vintage cooking tool in a color that matches their kitchen). This way, you'll have a better shopping time — and end up with cooler gifts. For example, if you're shopping for a friend who loves to host, you could pair together some fun vintage glasses, a unique tray, and some retro coasters or a funky bottle opener. Keeping an eye out for things that fit into that theme rather than looking for one singular item will make it a lot easier to put together gifts that feel cohesive. Start Early and Shop Often Sometimes, saving money requires a trade-off. If you’re investing less cash and want to have the same impact, you may need to devote more of your time instead, Kraemer admits: "With patience and repeat visits to the thrift store, however, I think you’ll find that your time investment will pay off." Avoid waiting until the last possible moment to thrift your gifts, as you might fall victim to panic-buying something random or tacky, Kraemer warns. If it feels daunting initially, Eggert suggests adjusting your mental script from "ugh, I have to do this" to "I’m on a treasure hunt quest!" "Thrifting is all about frequency," Bannister chimes in. "Not only does it take time to hone your eye for thrift shopping, but the more frequently you pop into a thrift store, the more likely you are to have shopping success. The earlier you can start your Thriftmas shopping, the better." Seek Out Ready-to-Gift Goods "Just because something is a great deal or could make for a killer DIY project doesn't mean that you're going to have the time — or, let's be honest, the desire — to upcycle it into the best gift it can be," Bannister says. "Instead, I recommend being realistic about both your skills and your bandwidth to transform thrifted items." In addition to not requiring a full glow-up, Eggert seeks out items that are unique and unlike anything you might easily score from a major retailer. "That uniqueness can come from the object itself or from the look or patina it has. For example, a set of vintage brass candlestick holders has a look totally different from a factory-finished brass set you find at a chain superstore. I think finding unique items takes gift-giving to another level," Eggert says. Inspect the Quality Before adding anything to your cart, analyze it carefully because thrifted items usually cannot be returned, Eggert flags. "Avoid thrifting objects that are broken, stained, or missing pieces. Nobody wants to receive a damaged gift," she says. Everything you purchase should be in good condition or could be easily cleaned, and should be constructed well with quality materials—and only safe building blocks. "Definitely steer clear of anything with lead in it. While you can purchase inexpensive lead test kits online and test items once you’ve purchased them, it’s a good rule of thumb to proceed with caution when it comes to vintage dishware, ceramics, and pottery made before 1971," Eggert explains. Stay Focused Thrifting is for anyone and everyone, Kraemer reminds us, "and you don’t need a special sauce to be able to do it. However, what will set you apart from other shoppers in the thrift store is if you can train yourself to slow down and focus on what’s in front of you." It’s very easy to get overstimulated by the dizzying array of options in a thrift store, she admits, and for the best finds, you must be present and anchor yourself in one area at a time. With practice, you can train your brain to be where your feet are, and teach your eyes to zoom in on the gems. At a certain point, you might find it meditative like Kraemer, who calls "thrifting Christmas gifts as some sort of therapy."  Beyond staying in the moment mid-shop, it’s wise to not lose track throughout the year. To track along with her Thriftmas progress, Bannister likes to keep a note in her phone with a running list of thrifted categories she’s seeking — and what she’s already snagged. Then when she’s out and about, she has an easy reference for the things she’s still treasure hunting for and what she already has stashed away from earlier in the year.

How To Make Sure Your Sale Crosses the Finish Line

By Dusty Rhodes • November 10, 2025
If there was one simple step that could help make your home sale a seamless process, wouldn’t you want to know about it? There’s a lot that happens from the time your house goes under contract to closing day. And a few things still have to go right for the deal to go through. But here’s what a lot of sellers may not know. There’s one part of the process where some homeowners are hitting a road bump that’s causing buyers to back out these days. But don’t worry. The majority of these snags are completely avoidable, especially when you understand what’s causing them and how to be proactive. That’s where a great agent (and a little prep) can make all the difference. What’s Causing Some Buyers To Back Out The latest data from Redfin says 15% of pending home sales are falling through . And that’s not wildly higher than the 12% norm from 2017-2019. But it is an increase. That means roughly 1 in 7 deals today don’t make it to the closing table. But, at the same time, 6 out of 7 do. So, the majority of sellers never face this problem – and odds are, you won’t either. But you can help make it even less likely if you know how to get ahead. You might assume the main reason buyers are backing out today is financing. But that’s actually not the case. The most common deal breaker today, by far, is inspection and repair issues (see graph below):

Planning To Sell in 2026? Start the Prep Now

By Dusty Rhodes • November 3, 2025
You’ve got big plans for 2026. But what you do this year could be the difference between a smooth sale and a stressful one. If you’re thinking of selling next spring (the busiest season in real estate), the smartest move you can make is to start prepping now. As Realtor.com says : “If you’re aiming to sell in 2026, now is the time to start preparing , especially if you want to maximize the spring market’s higher buyer activity.” Because the reality is, from small repairs to touch-ups and decluttering, the earlier you start, the easier it’ll be when you’re ready to list . And, the better your house will look when it’s time for it to hit the market. Why Starting Now Matters Talk to any good agent and they’ll tell you that you can’t afford to skip repairs in today’s market. There are more homes for sale right now than there have been in years. And since buyers have more to choose from, your house is going to need to look its best to stand out and get the attention it deserves. Now, that doesn’t mean you have to do a full-on renovation. But it does mean you’ll want to tackle some projects before you sell. Your house will sell if it’s prepped right. And you don’t want to be left scrambling in the spring to get the work done. Because here’s the advantage you have now. If you start this year, you’ll be able to space those upgrades and fixes out however you want to. More time. Less stress. No sense of being rushed or racing the clock. Whether it’s fixing that leaky faucet, repainting your front door, or finally replacing your roof, you can do it right if you start now. And you have the time to find great contractors without blowing your budget or paying extra for rushed jobs. Get an Agent’s Advice Early To figure out what’s worth doing and what’s not in your market, you need to talk to a local agent early. That way you’re not wasting your time or money on something that won’t help your bottom line. As Realtor.com explains : “Respondents overwhelmingly agree that both buyers and sellers enjoy a smoother, more successful experience when they start early. In fact, a recent survey reveals that, for sellers, bringing a real estate agent into the process sooner can pay off significantly. ” A skilled agent can tell you: What buyers in your local area are looking for The repairs or updates you need to do before you list How to prioritize the projects, if you can’t do them all Skilled local contractors who can help you get the work done And having that information up front is a game changer. To give you a rough idea of what may come up in that conversation, here are the most common updates agents are recommending today, according to research from the National Association of Realtors (NAR):