What if the appraisal comes in lower than purchase price?
Question: What if the Appraisal comes in lower than the purchase price?
Answer: If the offer is subject to an appraisal section 8.2 of the REPC applies: 8.2 APPRAISAL CONDITION. Buyer's obligation to purchase the Property: [ ] IS [ ] IS NOT conditioned upon the Property appraising for not less than the Purchase Price. This condition is referred to as the “Appraisal Condition.” If checked in the affirmative, Sections 8.2(a) and 8.2(b) apply; otherwise they do not.
(a) Buyer’s Right to Cancel. If after completion of an appraisal by a licensed appraiser, Buyer receives written notice from the Lender or the appraiser that the Property has appraised for less than the Purchase Price (a “Notice of Appraised Value”), Buyer may cancel the REPC by providing written notice to Seller (with a copy of the Notice of Appraised Value) no later than the Financing & Appraisal Deadline referenced in Section 24(c); whereupon the Earnest Money Deposit shall be released to Buyer without the requirement of further written authorization from Seller. Buyer may also negotiate with Seller to reduce the price, or may make up the difference in Cash. Or Buyer and Seller may meet somewhere in the middle and Buyer would make up that cash difference.
(b) Failure to Cancel. If the REPC is not cancelled as provided in this section 8.2, Buyer shall be deemed to have waived the Appraisal Condition, and except as provided in Sections 8.1(b) and 8.3(b)(i), the Earnest Money Deposit shall become non-refundable.
Keep in mind in Section 8.3(bii) that even if Buyer does not cancel the REPC and loses their Earnest Money, according to this section, they would not be required to Buy the property if they could not obtain the loan. (ii) Buyer’s Right to Cancel After the Financing & Appraisal Deadline. If after expiration of the Financing & Appraisal Deadline referenced in Section 24(c), Buyer fails to obtain the Loan, meaning that the proceeds of the Loan have not been delivered by the Lender to the escrow/closing office as required under Section 3.2, then Buyer shall not be obligated to purchase the Property and Buyer or Seller may cancel the REPC by providing written notice to the other party.