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

Dusty Rhodes • July 7, 2025


Whether you’re looking to buy your first home or are a seasoned buyer looking to upgrade or downsize, navigating the housing market can definitely be daunting. Regardless of your experience level, the complex jargon and legalities involved when purchasing a home can be difficult to understand. One such concept all homebuyers should be familiar with is an appraisal contingency. In this guide, we’ll be exploring exactly what an appraisal contingency is and how it can impact the 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.


Understanding home appraisals


Once the buyer has found a home they wish to purchase, they agree upon a purchase price with the seller, and if they opt for a mortgage loan, they then apply for a mortgage. At this stage, 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—this difference is known as an appraisal gap.


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 are appraisers looking for?


The appraisal value of a property is determined by a licensed appraiser who evaluates the property’s market value based on several constituents. Certified appraiser John Mulligan of Maui Aina Appraisal Company notes the following six factors: 

  1. Property characteristics: The appraiser considers the configuration, improvements, and amenities of a property such as the square footage, the number of bedrooms and bathrooms, the age of the property, and any unique features like 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 three other recently sold (within the last 90 days) properties that are similar in size, age, and features.
  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 at place 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.


These six main factors are taken into consideration by the appraiser to determine the fair market value of the property. This appraisal value is extremely 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.


Understanding an appraisal contingency – how does it 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 licensed appraiser evaluate the property to determine its value based on factors like property characteristics, location, and comparable properties.
  3. If the appraised value of the property is equal to or higher than the agreed-upon purchase price, 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 can:
  • 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 for the buyer because it protects them 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.


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 property appraisal reflecting fair market value.


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 requires an appraisal to confirm the property’s value matches the loan amount. In a competitive market, a buyer may offer more than the appraised value to secure the purchase. In this case, an appraisal gap clause can be added to the contract to address any difference between the purchase price and the appraised value.


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.


What is the difference between an 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 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. 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).


Can an appraisal contingency be waived?


In short, yes, but it is risky. If you choose to waive an appraisal contingency, you are then agreeing to purchase the property at the agreed-upon purchase price, regardless of the appraisal value. 


When should you use or waive an appraisal contingency?


When deciding whether to use an appraisal contingency, here are some factors to consider:

  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 appraised value of the property is 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 help you back out of the purchase if the appraisal value is lower than the purchase price.


If you’re deciding to waive an appraisal contingency, consider the following:

  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. If you are comfortable with this 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. 
  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. 


If you do decide to waive an appraisal contingency for whatever reason, be aware that if the property does not appraise for the purchase price, you may be responsible for making up the price difference in cash.


What happens if the appraisal is lower than the sale price


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, such as:

  • 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, they 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. 


It’s important to note that a lower appraised value is not always a deal breaker. If the buyer and seller are willing to work together to find a mutually acceptable solution, the purchase can proceed. However, if an appraisal contingency is not in place and this occurs, your loan may be denied unless you decrease your down payment. If you choose to not do so, you will have to walk away from the sale and thus forfeit your money.


What happens if the appraisal is higher than the sale price


If the appraised value is higher than the agreed-upon purchase price, the purchase can proceed as planned with the agreed-upon price since the seller is legally bound to this price regardless of the appraisal value. However, there may be some exceptions depending on the terms of the contract and state laws. If this occurs, this is in favor of the buyer as upon move-in, they receive more equity. This is true with or without an appraisal contingency, but without one the property purchased can proceed without the buyer needing to make up the difference.


Why and why not appraisal contingency


There are several reasons buyers may include an appraisal contingency such as:

  • Financial protection: If the appraised value is lower than the agreed-upon price, the buyer won’t be obligated to purchase the overpriced property.
  • Negotiating power: Having an appraisal contingency allows the buyer to renegotiate the terms of the purchase if the appraised value is lower than the agreed-upon price.
  • Ability to walk away: If the appraised value is lower than the agreed-upon purchase price, the buyer can terminate the deal and get their money back.


Despite the benefits, there are a couple of reasons why a buyer might not want to include an appraisal contingency such as:

  • Less competitive offer: In a competitive market, a seller may favor another offer, one without an appraisal contingency, since there would be fewer barriers to closing.
  • Renegotiation changes: If the appraised value is lower than the agreed-upon purchase price and renegotiation is taking place, it’s possible for the seller to change their offer.


Related FAQs about appraisal contingencies

  • 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 such as a financing contingency, inspection contingency, title contingency, and home sale contingency
  • Is there an appraisal contingency deadline?
    The appraisal contingency deadline is negotiated between the buyer and seller and is typically set at 7-10 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. Thus, it is 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. For example, government-backed loans may have a longer validity period of up to 180 days (6 months). This is because 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.
  • 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


Dusty Rhodes Properties is the Best Realtor in Myrtle Beach! We do everything in our power to help you find the home of your dreams. With experience, expertise, and passion, we are the perfect partner for you in Myrtle Beach, South Carolina. We love what we do and it shows. With more than 22 years of experience in the field, we know our industry like the back of our hands. There’s no challenge too big or too small, and we dedicate our utmost energy to every project we take on. We search thousands of the active and new listings from Aynor, Carolina Forest, Conway, Garden City Beach, Longs, Loris, Murrells Inlet, Myrtle Beach, North Myrtle Beach, Pawleys Island, and Surfside Beach real estate listings to find the hottest deals just for you!

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Thinking about Selling Your House As-Is? Read This First.

By Dusty Rhodes • January 19, 2026
If you’re thinking about selling your house this year, you may be torn between two options: Do you sell it as-is and make it easier on yourself? No repairs. No effort. Or do you fix it up a bit first – so it shows well and sells for as much as possible? In 2026, that decision matters more than it used to. Here’s what you need to know. More Competition Means Your Home’s Condition Is More Important Again Over the past year, the number of homes for sale has been climbing. And this year, a Realtor.com forecast says it could go up another 8.9% . That matters. As buyers gain more options, they also re-gain the ability to be selective. So, the details are starting to count again. That’s one reason most sellers choose to make some updates before listing. According to a recent study from the National Association of Realtors (NAR), two-thirds of sellers (65%) completed minor repairs or improvements before selling ( the blue and the green in the chart below ). And only one-third (35%) sold as-is : 

Smart Home, Big Risks: Top Cybersecurity Threats Homeowners Need To Know

By Dusty Rhodes • January 12, 2026
Smart home devices are becoming increasingly common. From webcams to thermostats, to TVs and even AI-improved refrigerators, homeowners have an array of choices to make their lives easier. These devices can also boost home prices, making them a worthwhile investment. Yet, these smart home gadgets can also be compromised and are subject to a slew of cybersecurity threats. In fact, Rambus , a chip and silicon IP provider, found that an eye-popping 80% of Internet of Things (IoT) devices “are vulnerable to a wide range of attacks.” Mike Halbouni , founder of PoyntGuard , a security camera and surveillance installation company, said that as homes become more connected, cybersecurity is just as critical as physical security. “Every smart device that connects to your network, including cameras, doorbells, thermostats, smart locks, and voice assistants, can become a potential entry point for hackers if not properly secured,” he said. Common cybersecurity threats, from weak passwords and credentials Jason Chen , technical director and tech expert at JarnisTech , a professional electronics manufacturer, said that the more “smart” your home gets, the more exposed you become. “Convenience has a cost, and that cost is usually hidden in the fine print of your device’s security settings,” he said. The most threat to your smart home security comes from weak default credentials and passwords, according to Thomas S. Hyslip , assistant professor of instruction for the M.S. in cybercrime program in the criminology department at the University of South Florida . As Hyslip explained, many smart devices, including smart cameras, baby monitors, smart doorbells, network routers, and smart hubs, are shipped with publicly known or easily guessable factory passwords and settings, such as "admin" or "123456.” “Cybercriminals use automated tools to scan the internet, searching for devices with these default settings to gain immediate and full control, potentially compromising your entire home network,” he said. To mitigate this threat, homeowners must change passwords immediately and often. Another tip: Avoid inexpensive IoT devices with hard-coded, unchangeable passwords, as these products are permanently vulnerable to takeover and pose an unacceptable risk to your network security, he added. Lack of knowledge Tony Anscombe , chief security evangelist at ESET, a cybersecurity vendor, echoed the sentiment, saying that smart devices introduce several potential risks, the primary ones being privacy and security. Anscombe added that consumers need to ensure they understand exactly what data is being collected by smart devices, how it’s being secured, where it’s being stored, and whether it will be used for any other purposes or shared with a third party. Tim Kravchunovsky , CEO of Chirp , an IoT solutions provider for short-term rentals, also said that the biggest cybersecurity threat most homeowners face isn’t a single device, it's their own home network and IT knowledge. “Depending on how much home automation someone has, their devices may hold extremely sensitive information. Yet most people who automate their homes aren’t very technical, and that lack of expertise creates wide security gaps,” he said. He added that nearly all consumer IoT devices operate over Wi-Fi. Once an attacker gains access to a home’s Wi-Fi network, which is often far easier than people think, they can pivot to the devices themselves and access the data flowing through them. “Businesses recognized this risk years ago, which is why many now isolate IoT devices in a completely separate environment rather than letting them live on the main network,” he said. Smart cameras and doorbells According to Chen, these devices, which are designed to keep you safe, are actually easy prey for hackers themselves. “I know individuals who have used hacked cameras to spy on families, to record them inappropriately, to even broadcast those feeds for everyone to see without their consent,” he said, adding that this happens because many people never update default passwords, update firmware, or connect cameras to their main Wi-Fi networks. “A hacker, after penetrating, can monitor all of your movements—literally,” he said. Chen added that to fix this, there are several steps you can take: turn on two-factor authentication (2FA); change all default login credentials; and set up a separate Wi-Fi network just for smart devices. Smart speakers and voice assistants Dave Meister , cybersecurity evangelist of Check Point Software Technologies , said there have been instances in which attackers have tricked these devices into making purchases or controlling other smart-home features. They’re also constantly listening, which makes them a privacy risk if not configured well, he said. What to do: According to Meister, turn off voice-purchasing, use strong and unique passwords, and use the physical mute button when you’re not using it. And as Chen said: “The golden rule here is if a device is always listening, assume it is always collecting and act accordingly.” Smart locks and garage systems Smart locks make life easier, especially for those among us who constantly forget where they put their keys. However, as Chen put it, these introduce a terrifying vulnerability: If someone compromises your smartphone or your Wi-Fi, your front door could literally unlock for them. “The same goes for connected garage systems. Many rely on cloud-based apps that, if breached, could grant access to your home in seconds,” he said. Instead, Chen urges homeowners to use locks with end-to-end encryption; lock down your smartphone with biometrics and remote wipe options; and audit who has access—remove old guest codes or app permissions you’ve forgotten about. Smart TVs and streaming devices Gene Petrino , lead adviser for Security.org , a company specializing in personal and home security, and a retired SWAT commander, said that many devices include microphones and cameras that can be exploited if security is weak. Petrino recommends turning off unused connectivity features, such as voice control and camera, and only installing apps from trusted sources. In addition, he urges homeowners to enable firmware updates regularly. “Think of your smart home like a digital ecosystem; each device is a door. The more devices you connect, the more doors you create. Secure each one with strong passwords, regular updates, and separate networks for critical systems,” he said. Check Point Software Technologies’ Meister added that, surprisingly, these are among the most vulnerable devices in the home. “A lot of the cheaper streaming boxes run old software, and we’ve seen cases this year where malware actually came pre-installed on knockoff devices people bought online. Once they’re plugged in, they can be used for things like click-fraud or even large-scale attacks,” he said. Meister offered another tip: Stick to reputable brands and keep up to date. Home Wi-Fi router “The router is basically the front door to your digital house,” said Meister. As he noted, the average home sees dozens of attack attempts a day, and a lot of IoT traffic isn’t encrypted at all. If your router is old or still using the default login, it’s an easy target. What you can do is use a strong Wi-Fi password and turn on automatic updates, he said. Smart thermostats Security.org’s Petrino said attackers can gather data on your daily routines—like when you’re home or away—or use unsecured devices to access your entire Wi-Fi network. He said that homeowners should create a separate network for smart devices, use strong router passwords and WPA3 encryption, and avoid connecting unnecessary appliances to the internet. Meister also cautions that many owners don’t realize appliances can be hacked, too, and that older or cheap models often never get software updates, which means any vulnerability lives forever. His advice? Before buying, check whether the brand actually updates its products. And if a device stops getting updates, it’s time to replace it. “If I had to give homeowners one simple rule, it’d be this: Treat every smart device like a tiny computer. Update it, use a strong password, and don’t put it on the same network as the devices that actually matter, like your laptop or phone,” he added. 

When Is the Right Time to Downsize Your Home?

By Dusty Rhodes • January 5, 2026
Downsizing your home is a major decision, and the right moment to act is not always obvious. The best time to downsize is whenever your current home no longer aligns with your financial, lifestyle, or personal needs. It’s less about the market and more about your life stage. But deciding to downsize can be hard, and leaving a home filled with cherished memories can bring heartache. So, when is the right time to downsize? If owning your home in Seattle, WA , or renting a house in Portland, OR , has brought more stress and worry than joy in recent years, the time may be right to downsize into something smaller. In this Redfin real estate article, we’ll explore how, by considering financial, emotional, and maintenance factors, you can determine if now is the perfect time to trade your large property for a smaller, more manageable space. Financial signs you should consider downsizing Your finances often provide the clearest signal that it is time to downsize. Carrying a large mortgage or facing ever-increasing utility and maintenance bills can put unnecessary strain on your budget. High maintenance costs : Is your maintenance budget constantly being stretched by repairs on a large or older home? The costs of running and maintaining unused square footage add up significantly over time. Downsizing can drastically reduce these expenses, freeing up money for other goals. Nearing or entering retirement : Many people choose to downsize right before or as they enter retirement. This is an excellent opportunity to reduce housing payments, eliminate your mortgage, and unlock home equity. As Patricia Cavanaugh of The 3rd Act , a retirement planning service for seniors, says, “It’s time to downsize when your personal possessions and material goods are weighing you down and preventing you from making room for your new retirement lifestyle.” Desire to free up equity : Selling a larger, more expensive home and buying a smaller one means you will have a substantial amount of equity released. This money can be used to travel, invest, or simply create a more secure financial cushion for the future. Lifestyle and emotional indicators Beyond money, your day-to-day life is a powerful indicator of whether a smaller home makes sense. The way you use your space can reveal if your home is now too big for your needs. Living a simpler life may offer helpful benefits to your emotional and mental health. Becoming an empty nester : When your children move out, you might find yourself with multiple unused bedrooms and living areas. This space not only costs money to maintain and heat, but it can also feel unnecessary. Downsizing to a cozier home allows you to repurpose that space and focus on a new, simpler chapter. Too much unused space: Walk through your home and identify rooms you rarely or never use. If you have rooms that feel like storage areas rather than functional living spaces, it is a sign that your home is simply too large for your current lifestyle. Downsizing allows you to live more efficiently. A simpler, less demanding life : Large properties require a lot of effort to clean, maintain, and landscape. If you are starting to feel burdened by the chores associated with your home, downsizing to a smaller house or a low-maintenance condo can dramatically improve your quality of life. This trade-off gives you more time for hobbies or relaxation. What about the housing market? While your personal situation is the most important factor, the market can influence your timing. The best financial time to downsize is generally when your current home’s value is high. This allows you to maximize the profit from the sale, which directly translates to more funds for your smaller purchase. However, remember that when sale prices are high, so are purchase prices. A good real estate agent can help you analyze the market to find a sweet spot where you achieve the best outcome on both transactions. Making the move Once you decide it is the right time to downsize , the next big step is to declutter. This process can be the most time-consuming part of the move. Leaving an old home can be an emotional process, so the best approach is to start early and be ruthless about what you truly need. Focus on organizing, donating, and selling items well before you list your property . Frequently asked questions: What is the main benefit of downsizing? The main benefit is financial: Reducing your monthly expenses, cutting utility and maintenance bills, and freeing up a significant amount of home equity. Will downsizing definitely save me money? In most cases, yes. While the cost of moving and closing on a new, smaller home is a factor, the long-term savings from lower property taxes , lower utility costs, and reduced or eliminated mortgage payments almost always result in substantial savings. What should I do before I list my current home? The most important step is decluttering and organizing every space. A home that is neat and free of excess belongings shows much better to potential buyers and makes your eventual move much easier.