Can the buyers back out after the appraisal comes in lower than asking

UPDATED: Sep 30, 2022

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Can the buyers back out after the appraisal comes in lower than asking

The buyers were asking $229,900 we counter-offered but they said no they want asking price so we gave it to him now the appraisal comes back as $222,000. Legally, can the buyers back out?

Asked on July 13, 2017 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

No, they can only back out due to a low appraisal if--
1) The contract contained a term or provision that the buyers could terminate without penalty if the appraisal was too low (this is often called an "appraisal contingency"; some contracts have them, some don't); or
2) There is a "finance contingency" or "mortgage contingency" allowing them to terminate if they don't get financing--and the low appraisal causes them to be unable to get a loan.
Otherwise, they are obligated and have to go through with the sale, even if the low appraisal and any effect it has on their financing causes them to have to pay more out of pocket (i.e. put more money down, finance less).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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