Appraisal Contingency in Florida
An appraisal contingency protects Florida buyers by allowing them to renegotiate or cancel a purchase contract if the property's appraised value falls below the agreed purchase price. This contingency is standard in financed transactions where the lender requires an appraisal to confirm the property's value supports the loan amount.
How It Works
The buyer's lender orders an appraisal from a licensed, independent appraiser. If the appraised value meets or exceeds the purchase price, the contingency is satisfied. If the appraised value is lower, the buyer has the right to request a price reduction, contribute additional cash to cover the gap, challenge the appraisal, or terminate the contract and recover the earnest money deposit.
Competitive Market Considerations
In hot Florida markets, buyers sometimes waive or modify appraisal contingencies to strengthen their offers. An "appraisal gap guarantee" commits the buyer to covering a specified dollar amount of any shortfall in cash. While this makes the offer more attractive to sellers, it exposes the buyer to paying more than the property's independently determined value.
Related Terms
Barnes Walker Real Estate
Barnes Walker advises buyers and sellers on appraisal contingency strategies in Florida real estate transactions. Contact our real estate team for guidance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC