How Do I Waive an Appraisal Contingency After a Low Appraisal?

Q: I have a buyer under contract who is paying cash for a property. In Section 3 – Financing Type, they selected “Yes” for the appraisal contingency. We’ve now received the appraisal, and it came in $5,000 below the purchase price. The contingency deadline has not yet passed, but the buyer is comfortable moving forward as-is and does not want to renegotiate. What are the appropriate next steps in this situation?

A:  Under Section 6.2 – Failure of Appraisal Contingency, an appraisal below the purchase price triggers the buyer’s obligation to promptly notify the seller and then proceed with one of the three available options.

The first step is to deliver OREF 109 – Notice from Buyer to Seller, selecting the option for Failure of Appraisal Contingency.

Since the buyer wishes to move forward, the next step is to formally waive the Appraisal Contingency. This can be done using OREF 002 – Addendum to Real Estate Sale Agreement, with language such as: “Buyer hereby waives the Appraisal Contingency.”  This confirms the buyer’s decision to proceed and removes their right to terminate the transaction based on the appraisal.

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