What can be a result of a buyer backing out due to an appraisal contingency?

When a buyer backs out of a real estate transaction due to an appraisal contingency, it typically indicates that the property appraised for a lower value than the agreed-upon purchase price. An appraisal contingency is a clause in a real estate contract that allows the buyer to terminate the agreement if the property does not appraise at or above a specified value. This protects the buyer from overpaying for a property that may not be worth the purchase price as determined by a professional appraiser.

In this context, if the appraisal comes in lower than what the buyer and seller initially agreed upon, the buyer has the option to withdraw from the deal without facing financial penalties, as long as they are acting within the conditions set forth in the contract. This ensures that the buyer is not left in a situation where they would have to secure additional funds to cover the discrepancy between the appraised value and the contract price.

The other options presented may seem relevant but do not directly relate to the specific outcome of the appraisal contingency being invoked. For example, a buyer finding better financing or a lender halting the loan process are not direct results of the appraisal being low. Furthermore, while a seller might agree to lower the price in response to a low appraisal, that is not guaranteed