The Appraisal Time Crunch: Options When the Deadline Looms

Q: I’m working with a buyer who is paying cash for the property, and they chose to include the appraisal contingency in Section 6 of the OREF 001 – Residential Real Estate Sale Agreement. Even though the appraisal was ordered very shortly after acceptance, the appraiser has said they won’t be able to access the property and complete the report before the contingency deadline. What happens in this situation? 

A:  If the appraisal contingency cannot be satisfied by the Appraisal Contingency Deadline identified in Section 6.1 of the Residential Real Estate Sale Agreement, the buyer has until the end of the Appraisal Contingency Deadline to provide notice to the seller that it can’t be done. 

Once the buyer delivers this notice, Section 6.2 gives the buyer three options, which must be chosen within two business days of delivery of the notice: 

1. a) The buyer and seller may agree in writing to extend the Appraisal Contingency Deadline.
2. b) The buyer may waive the appraisal contingency and continue with the transaction.
3. c) The buyer mayterminatethe transaction due to the failure of the appraisal contingency and receive a refund of the earnest money deposit. 

Because the appraisal deadline is a key term of the agreement, buyers and their agents should clearly communicate it to the appraiser and confirm as early as possible whether the appraisal can be completed on time. 

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