Why Does the Appraisal Contingency Have Its Own Deadline?

Q:  Lenders often wait to order the appraisal until after the inspection is resolved, which can make it challenging to meet the Appraisal Contingency Deadline. What was the intent behind establishing a defined timeframe in the Sale Agreement as well as separating it from the financing contingency? 

A:  The Appraisal Contingency was introduced in response to subscriber feedback, giving buyers the flexibility to include an appraisal contingency in any transaction—even when financing is not involved. 

The timeline is intentionally flexible. While the default is 20 business days, the agreement includes a blank allowing agents to adjust the deadline based on market conditions and input from the lender or appraiser. If more (or less) time is needed, the buyer’s agent can tailor the timeframe to better align with the transaction. 

There was also feedback supporting a more balanced approach to financing timelines. In prior versions, the financing contingency could extend through closing, which raised concerns for sellers. To address this, the Loan Contingency now includes a defined default timeframe of 20 business days, which can also be adjusted as needed based on lender input. 

Finally, keep in mind that a lender may still require an appraisal as part of the loan approval process, even if an Appraisal Contingency is not included in the Sale Agreement. The lender’s underwriting requirements operate independently from the contractual contingencies selected by the buyer. 

All comments and responses from OREF or its staff, managers, and volunteers are non-legal opinions made for general purposes. Each Forms subscriber must rely solely upon their Principal broker or personal legal counsel for specific advice and instruction. You and your client should independently confirm that the Form(s) you use are legally suitable for the purposes intended and that they are current with respect to all laws and regulations.