What’s the Difference Between an Appraisal Waiver and Waiving the Appraisal Contingency?
Short Answer:
An appraisal waiver means your lender doesn’t require a traditional home appraisal for your loan, often because your qualifications and the property meet certain criteria. Waiving the appraisal contingency means you, as the buyer, agree to move forward with the purchase even if the home appraises for less than your offer, potentially requiring you to pay the difference out of pocket.
Long Answer:
If you’re buying a home or just getting into the real estate world, you’ve probably heard the terms “appraisal waiver” and “waiving the appraisal contingency.” They sound super similar, right? But trust me, they mean very different things—and knowing the difference can save you a lot of stress (and maybe even some money).
What Is an Appraisal Waiver?
An appraisal waiver is basically a green light from your lender saying, “Hey, we don’t need a full appraisal on this property.” Instead of sending out an appraiser to check out the home and give it a value, the lender uses data and algorithms (think: recent sales, property history, and other fancy tech stuff) to decide if the price makes sense.
Why would a lender offer an appraisal waiver?
- The buyer is super qualified (great credit, solid down payment)
- The property fits certain criteria (like being a single-family home, not a fixer-upper)
- The loan type allows it (not all loans do!)
- Sales price is under $1 million bucks
What Does It Mean to Waive the Appraisal Contingency?
Now, waiving the appraisal contingency is a totally different ballgame. This is something the buyer decides to do when making an offer on a house.
Normally, when you make an offer, you include an “appraisal contingency.” This means if the home doesn’t appraise for the price you offered, you can back out or renegotiate. It’s a safety net.
But if you waive the appraisal contingency, you’re saying, “No matter what the appraiser says, I’m buying this house at the agreed price.” Even if the appraisal comes in lower than your offer, you’re on the hook to make up the difference—usually with more cash at closing.
Why would someone waive an appraisal contingency?
- In a hot market, it makes your offer more attractive to sellers
- You’re confident in the value or have extra cash to cover a shortfall
Waiving the appraisal contingency is a risk you take to win the house, but it could cost you if the appraisal comes in low.
Quick Recap: Appraisal Waiver vs. Waiving the Appraisal Contingency
- Appraisal Waiver: The lender says you don’t need an appraisal. Less hassle for you!
- Waiving the Appraisal Contingency: You (the buyer) agree to buy the house even if the appraisal is low. More risk for you!
Why Does This Matter?
Mixing up these two terms can lead to some big surprises during your homebuying journey. Always ask your lender and real estate agent what’s actually happening with your loan and your offer. And remember: just because you get an appraisal waiver from your lender doesn’t mean you’ve automatically waived your appraisal contingency in your contract (or vice versa).
Conclusion
Buying a home is a big deal, and the details matter. Now that you know the difference between an appraisal waiver and waiving the appraisal contingency, you’re one step closer to being a real estate pro!
Have more questions about home buying? Drop them in the comments or reach out—let’s make your real estate journey a little less confusing!
These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.
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