Appraisal Contingency is the contract clause that lets a buyer back out of (or renegotiate) a real estate purchase if the property appraises for less than contract price. Standard in consumer-mortgage purchase contracts; less common in cash and hard-money investor deals. When an investor buyer waives appraisal contingency, the deal closes at contract price regardless of appraisal — but the lender's leverage stays capped at the appraised value, so the buyer brings more cash to close. This is why a low appraisal kills more investor files at the closing stage than at any other.
Property Valuation