Is it legal to add a non-contingent appraisal clause into a purchase and sale contract?
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Is it legal to add a non-contingent appraisal clause into a purchase and sale contract?
With today’s market, we are being offering our asking price and even higher but the home won’t appraise for that much. Can we add a clause that says to the buyer that they are of course welcome to do an appraisal, but the final sale price won’t be contingent on it?
Asked on July 2, 2015 under Real Estate Law, Georgia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
It is legal, but IF the purchase is contingent on getting a mortgage, then you won't be able to sell the home--the buyer can't get a mortgage if the home won't appraise (and the lender cannot be made to lend if the home doesn't appraise; the lender is not a party to the contract and is not bound by it). If there is also a finance contingency in the contract, then the buyers would be released from their obligation(s) without penalty if they can't get financing. Of course, for a cash sale, the appraisal is irrelevant if the buyer agrees to not have it affect the price.
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