Understanding Buyer Protection through Loan Contingency & Appraisal Contingency – North Scottsdale Real Estate
The standard Arizona Purchase Contract includes a loan contingency and an appraisal contingency; two distinct clauses designed to protect Buyers and their Earnest Money Deposits (Click Here to learn more about Earnest Money Deposits). The following video explains these two protections for Buyers.
Here is the full text explaining these conditions as per the standard Residential Resale Real Estate Purchase Contract from Arizona Association of Realtors®:
Loan Contingency: Buyer’s obligation to complete this sale is contingent upon Buyer obtaining loan approval for the loan described in the AAR Loan Status Report without conditions no later than COE Date. If Buyer is unable to obtain loan approval without conditions by COE Date, Buyer shall deliver a notice of the inability to obtain loan approval without conditions to Seller or Escrow Company no later than COE Date.
Unfulfilled Loan Contingency: This Contract shall be cancelled and Buyer shall be entitled to a return of the Earnest Money if after diligent and good faith effort, Buyer is unable to obtain loan approval without conditions by COE Date. Buyer is aware that failure to have the down payment or other funds due from Buyer necessary to obtain the loan approval without conditions and close this transaction is not an unfulfilled loan contingency. Buyer acknowledges that prepaid items paid separately from earnest money are not refundable.
Appraisal Contingency: Buyer’s obligation to complete this sale is contingent upon an appraisal of the Premises by an appraiser acceptable to lender for at least the sales price. If the Premises fails to appraise for the sales price, Buyer has five (5) days after notice of the appraised value to cancel this Contract and receive a refund of the Earnest Money or the appraisal contingency shall be waived.
Have you had any experiences buying or selling real estate where the Finance Clause or Appraisal Contingency have come into effect? We want to hear from you, send us an email to MyOpinion@ThePrecisionTeam.com or leave a comment below.
